As of this writing, Disney stock is down nearly 4% to 107.64, despite the record breaking performance of Star Wars: The Force Awakens. This poor performance is due to a downgrage from financial services firm BTIG who cut their rating to “sell” with a price target of $90.
In their note BTIG says, “It is important to note that we believe that if Star Wars Episode VII does not exceed $2 billion in worldwide box office revenue, Disney will miss our FY2016 and consensus earnings estimates as well.”
The firm said it expects Disney’s earnings per share growth to “slow dramatically and miss Street consensus expectations in 2017 and 2018.” The current multiple is unwarranted, BTIG said.
The continue by saying, “Disney management made a fundamental mistake by overpaying for sports rights based on overly aggressive multichannel video subscriber projections. Not only did Disney overpay for individual sports rights packages, they also acquired too many sports rights in an effort to prevent new competitors such as Fox Sports 1 and NBC Sports from growing stronger.”