The Setting: Citigroup media analyst Jason Bazinet reduced his rating on The Walt Disney Co. to “sell” from “hold” on Jan. 28, citing expected weakness at its theme parks. Disney shares fell 2% (57 cents each) the next day, closing at $28.80 per share.
The Logic: Bazinet based the change on the fact that Disney was reducing room rates at its East Coast resorts and its hotel rooms were cheaper to book a week before travel than they were three months in advance. He said that could mean that fourth-quarter demand did not pan out as expected, and that the “Mouse House” was resorting to last-minute room rate reductions to fill vacancies. He added that he has been wrong before in predicting theme-park performance.
The Response: In an unusual move — Disney rarely responds directly to analyst reports — chief financial officer Tom Staggs issued a press release claiming that the resorts were tracking slightly ahead of last year and it was pleased with performance.
The Result: Disney shares rebounded after Staggs' comments, closing on Jan. 30 at $29.41 each. Pali Research media analyst Rich Greenfield, a sometimes critic of Disney, upgraded his rating on the stock to “buy” from “neutral” on Jan. 30, issuing a report titled, “We're Finally Enchanted by the Mouse.”
