Disney slides as Barclays cuts rating on slow growth

Walt Disney Co. shares moved lower Monday after analysts at Barclays lowered their rating and price target on the media and entertainment group, citing slower growth from its Disney-plus streaming service.

Barclays analyst Kannan Venkateshwar cut his rating on Disney to “equal weight” from “overweight” and lowered his price target by $35 (U.S.) to $175 per share, noting the group’s growth story appears to be weakening heading into the final months of the year.

“Disney Plus growth has slowed significantly,” Venkateshwar said. “In order to get to its long term streaming sub guide, Disney needs to more than double its current pace of growth to at least the same level as Netflix,” adding that “long term streaming guidance could be at risk.” Disney will publish earnings from its fiscal fourth quarter, which ended in September, on Nov. 10, while updating investors on the growth rate of its Disney Plus streaming service.

Overall subscribers to its Disney-plus reached 116 million at the end of the third quarter — after adding 12.4 million new signees over the three month period — the company said on Aug. 12, although a lot of that growth was recorded from lower-margin markets overseas, including India, through its Hotstar offering.

Media revenue was up 18 per cent to $12.7 billion while Theme Parks revenue surged more than threefold from last year to $4.34 billion in the wake of COVID-related restrictions on attendance in the U.S. and elsewhere.