What is going on with Walt Disney Co (NYSE:DIS)? The company has reported some very good news recently, yet Disney’s stock price has actually declined. Do shareholders have a reason to be concerned? Or is Disney still in top-form?
Marvel’s Avengers: Endgame is now the with revenues that are over $2.79 billion. The Lion King was a as well, and it just had a record-making July opening weekend.
Further, the highly anticipated Disney+ streaming service will be released in November. Many analysts believe that this service will take a big part of market share from Netflix
(NASDAQ:NFLX).
But despite all of this good news, the price of Disney stock has drifted lower. I do not own any DIS stock but if I did this would concern me.
Wall Street Still Loves Disney
Most analyst houses on Wall Street love Disney. According to , 25 firms follow the company. Seventeen analysts rate Disney stock as a buy while seven have hold ratings. JPMorgan reiterated its “outperform” rating and thinks earnings could double in just 5 years.
In Tuesday’s note, Morgan Stanley analyst Benjamin Swinburne , “An immense execution challenge awaits Disney and its streaming ambitions, but its brands and content position give it a strong chance of success.” Yet, over the past 3 months, DIS has stagnated, rising just 2.4%. And since July 15, Disney’s stock declined 1.25%.
What gives?
Bottom Line
My experience has been that when a company reports good news and stock doesn’t react well, it is a bearish indicator. It is entirely possible that investors are concerned Disney will miss earnings estimates when it reports third-quarter results on Aug. 6.
Analysts are looking for Disney to report earnings of $1.75 per share on $21.49 billion in revenue. If Disney can’t connect, following a trend of blue-chip stocks missing earnings, then expect profit-takers to move on the stock.
If DIS stock does head lower, look for support around the $131 level. This level acted as support in May, and will be a critical juncture to watch going forward.
As of this writing, Mark Putrino did not hold a position in any of the aforementioned securities.
