Disney stock price slides 3% as UBS downgrades to neutral

Shares of Disney (NYSE:DIS) trade around 3% lower in New York today after UBS downgraded the stock from “buy” to “neutral” as concerns over the company’s park segment are mounting. 

Fundamental analysis: The eye of the storm

In a note titled “The Eye of the Storm”, UBS analyst John Hodulik downgraded the Disney stock from “buy” to “neutral” on the increased concerns of the coronavirus outbreak on the media giant business. He also lowered the price target from $162 to $114, which is around $10 higher than the current market price. 

Hodulik believes that the media giant won’t be in a position to open its parks before the end of the year, which constitutes a big part of Disney’s business. 

The “bright spot” for the company is its Disney+ streaming service which surpassed the figure of 50 million subscribers. Hodulik believes this number may reach 70 million by the end of the fiscal year. 

This is the third downgrade for Disney stock, after Guggenheim and Wells Fargo analysts also downgraded the stock earlier in April.

Technical analysis: The risk is to the downside

Shares of Disney are trading around 3% lower today following the third downgrade of the stock this month. Shares of the media giant jumped around 30% from the multi-year lows around the $80 mark, but it seems that the positive momentum is weakening. 

The price action has created an ascending wedge as the higher lows are catching up with the higher highs. A break of the ascending wedge to the downside can cause a deeper pull back, towards a support block of $80 - $90.

On the upside, the buyers have struggled to break the ascending trend line (the red line) around the $107 mark.

Summary

Shares of Disney have moved around 3% lower today after the UBS analyst downgraded the stock from “neutral” to “buy” as the concerns over the media giant’s business are increasing.