Seaport Research Partners has downgraded Walt Disney (NYSE: DIS) from a “Buy” rating to “Neutral,” citing concerns over the company’s future financial performance in its theme parks and Direct-to-Consumer (DTC) segment. The downgrade follows an analysis of Disney’s recent financial results, which highlighted declining profitability in its theme parks and lower-than-expected earnings in the DTC service.
Seaport analysts pointed out that, although Disney’s DTC division achieved positive segment operating income (SOI) earlier than anticipated, the overall profit outlook for fiscal 2025 remains below expectations. This shortfall is attributed to rising technology costs aimed at enhancing user experience and advertising capabilities.
Moreover, the growth rate of SOI in Disney’s theme parks is expected to decelerate in the coming quarters, negatively impacting the company’s short-term financial prospects. Seaport also noted that while Disney’s third-quarter fiscal 2024 report showed some strengths, such as profits in content sales and licensing driven by successful film releases, these factors are not enough to offset the broader financial challenges.
As a result, Seaport has withdrawn its previous price target of $120 for Disney shares, now forecasting a range between $94 and $117. The firm does not anticipate any near-term catalysts that could significantly boost investor confidence.