Analyst: Disney Parks Crucial To Recovery

Florida’s hospitals are running out of ICU capacity, but visitors will be able to return to Disney World’s Magic Kingdom Park and Animal Kingdom Park on Saturday. That’s at least good news for Walt Disney stock, J.P. Morgan says.

Barron's reports analyst Alexia Quadrani reiterated an Overweight rating and $135 price target on Disney shares Friday, writing that the “reopening of the parks globally is a critical sign of recovery as this removes the largest overhang at the company due to Covid-19.”

The opening of Disney’s Orlando resort comes just days before Disneyland Paris is scheduled to come back online. Hong Kong Disneyland reopened in June, while Shanghai Disneyland has been open since May. That means the company’s California location is the only one without a reopening date set.

The openings increase Quadrani’s confidence in the stock, but that isn’t the only thing keeping her bullish. She notes that Disney+ saw more than three-quarters of a million new mobile downloads of its app world-wide over the Independence Day weekend, which included the service’s July 3 release of musical Hamilton. That’s even more impressive considering Disney had stopped providing free seven-day trials to new subscribers before the release—so those that joined at to pay for at least one month.

Disney stock is down more than 19% year to date, as the pandemic has hit the company hard. It has had to delay movie releases, and a lack of live sports is a headwind for its ESPN business. And, of course, every day that its theme parks are closed is very costly for the company.

That is why investors have been so eager to see the parks reopen, even if some worry that it’s too soon. Disney has announced enhanced safety protocols, and no major outbreaks have been linked to the properties thus far. That has led some analysts to argue that the worst is over, and the shares are too cheap.