Disney Stock Price Target Lowered by Morgan Stanley Analyst

Disney Store Times Square

Delays for the theme park reopenings, movies returning to the multiplex and live sports returning to ESPN weigh down company shares, the firm notes.

Morgan Stanley analyst Benjamin Swinburne on Wednesday dropped his price target for shares in The Walt Disney Company after the theme park giant said Disneyland and Walt Disney World will remain closed indefinitely.

"Disney's portfolio is in the crosshairs of both the recession and the global pandemic," Swinburne wrote in an April 1 investors note as he forecast the COVID-19 pandemic will keep the studio's theme parks, resorts, retail stores, global theatrical exhibition and live sports broadcasts virtually closed or delayed through to the end of June.

The Morgan Stanley analyst reduced Disney's share price target from $170 to $130, though he reaffirmed his overweight rating for the studio. Stock in Disney on Wednesday traded down $1.85, or nearly 2 percent, at $94.75. 

The California and Florida theme parks were set to reopen today, but Disney last Friday said they will remain closed indefinitely due to the novel coronavirus pandemic.

Both Disney park closed their doors on the weekend of March 14. And on March 19, Disney warned investors that its financials would take a hit due to the pandemic.

Swinburne in late January raised his price target for Disney shares from $160 to $170 as the studio began rolling out its Disney+ streaming platform, but also as Disney closed its Shanghai theme park as the coronavirus outbreak began to spread.

The analyst, while arguing his outlook for Disney+ remains unchanged, said delays for the theme park reopenings, movies returning to the multiplex and live sports returning to ESPN were weighing down on Disney shares.

Swinburne added, "In the near term, DTC subscriber upside as a beneficiary of elevated streaming engagement during the pandemic could be offset by downside from delayed market launches internationally of Disney Plus, the cancellation of UFC fights on ESPN Plus, and the impact of delays in original content production."