Post by The Ultimate Nullifier on Dec 18, 2015 17:34:11 GMT -6
variety.com/2015/biz/news/disney-shares-dow-plunges-367-points-star-wars-1201665354/
The major stock indexes ended a volatile week of trading Friday with the Dow plunging 367.39 points, or 2.1%. Even with “Star Wars: The Force Awakens” storming the global box office, Disney shares were among the Dow’s biggest losers with a drop of 3.8%, or $4.29, to close at $107.72.
The equities markets were shaky most of the week due to growing fears of falling global oil prices and reaction to the Federal Reserve’s interest rate hike earlier this week.
Disney shares felt the pain more than most of its media peers. Netflix took a 3.67% hit to close at $118.02. Apple gave up 2.9% to close at $106.03.
The sell-off of Disney may have been sparked by a downgrade issued Friday morning by BTIG Research asserting that the coming declines in ESPN earnings will significantly reduce the company’s earnings power for 2017 and 2018. BTIG analyst Rich Greenfield cited the perfect storm of ESPN having overpaid for sports rights at a time when it is steadily losing affiliate revenue from subscriber losses.
“We believe Disney’s cable network profitability will meaningfully underperform investor expectations – with cable networks representing 44% of Disney’s segment operating income. We are now estimating that Disney’s FY2017 cable network operating income will be down year-over-year with total Disney FY2017 operating income flat,” Greenfield wrote.
BTIG downgraded the shares to a buy rating at a price target of $90. Investor enthusiasm for Disney’s prospects has run up the stock price to such a degree that the upside from the new wave of “Star Wars” movies is already baked into the share price. Greenfield also asserted that if “Star Wars” does not top $2 billion in worldwide box office Disney could underperform versus consensus estimates on its fiscal 2016 earnings.
Among other media stocks, Time Warner fell 2% to $63.51, CBS eased 1.8% ($45.66), as did Viacom ($39.06). Comcast dropped 1.7% ($56.40) while Fox gave up 1.4% ($27.83).
Among tech giants, Facebook dropped 2.2% to $104.04. Google slid 1.7% to $756.85.
The major stock indexes ended a volatile week of trading Friday with the Dow plunging 367.39 points, or 2.1%. Even with “Star Wars: The Force Awakens” storming the global box office, Disney shares were among the Dow’s biggest losers with a drop of 3.8%, or $4.29, to close at $107.72.
The equities markets were shaky most of the week due to growing fears of falling global oil prices and reaction to the Federal Reserve’s interest rate hike earlier this week.
Disney shares felt the pain more than most of its media peers. Netflix took a 3.67% hit to close at $118.02. Apple gave up 2.9% to close at $106.03.
The sell-off of Disney may have been sparked by a downgrade issued Friday morning by BTIG Research asserting that the coming declines in ESPN earnings will significantly reduce the company’s earnings power for 2017 and 2018. BTIG analyst Rich Greenfield cited the perfect storm of ESPN having overpaid for sports rights at a time when it is steadily losing affiliate revenue from subscriber losses.
“We believe Disney’s cable network profitability will meaningfully underperform investor expectations – with cable networks representing 44% of Disney’s segment operating income. We are now estimating that Disney’s FY2017 cable network operating income will be down year-over-year with total Disney FY2017 operating income flat,” Greenfield wrote.
BTIG downgraded the shares to a buy rating at a price target of $90. Investor enthusiasm for Disney’s prospects has run up the stock price to such a degree that the upside from the new wave of “Star Wars” movies is already baked into the share price. Greenfield also asserted that if “Star Wars” does not top $2 billion in worldwide box office Disney could underperform versus consensus estimates on its fiscal 2016 earnings.
Among other media stocks, Time Warner fell 2% to $63.51, CBS eased 1.8% ($45.66), as did Viacom ($39.06). Comcast dropped 1.7% ($56.40) while Fox gave up 1.4% ($27.83).
Among tech giants, Facebook dropped 2.2% to $104.04. Google slid 1.7% to $756.85.