Disney Falls on Downgrade

0

Walt Disney & Co. shares fell 5 percent early Monday after an analyst downgraded shares to “hold” from “buy,” noting the company’s stock price was bound to catch up to declining bond values.

Soleil Securities broker Laura Martin in an investor note lowered her 12-month price target to $23 from $40, noting that said Burbank-based Disney’s stock hasn’t dropped as much as its debt prices since Oct. 27.

Martin noted the relationship between Disney’s equity and debt prices has dropped to 60 percent since Oct. 27, since bond values have slipped while equity has stayed high. The correlation between Disney’s equity and debt trading prices is typically closer to 77 percent, she said.

“We believe this gap will close, as it has for Disney in the past, and for other companies in our coverage,” she said.

Disney’s stock has fallen 35 percent in the past year. The company earlier this month reported a 13 percent decline in fourth-quarter net income as broadcast advertising and business at its amusement parks slowed.

Shares were down $1.11 to $19.97 in morning trading on the New York Stock Exchange.

No posts to display