NEW YORK — Showbiz stocks rode a rocky market lower Tuesday with the glowing exception of Walt Disney Co., which saw its shares bounce higher by 6.1% after bullish reports from Wall Street.
Disney rose $1.81 to close at $31.69 even as profit taking and fears of higher interest rates decimated the broader market. The Dow Jones Industrial Average plunged 359 points and the Nasdaq fell 229 points — its worst performance since April. Tech stocks and blue chips were hit hardest as investors were swept up in a wave of panic at the prospect of the Federal Reserve raising interest rates at its next meeting in early February.
Most entertainment issues felt the pain as well. New merger partners Viacom and CBS were each down about 5%. MGM dipped 4.3%, Time Warner lost 3.3% and News Corp. fell 2.5%. Bucking the trend was Universal parent Seagram Co., which rose 2%.
Bullish on the Mouse
The biggest anomaly by far was Disney, buoyed by Morgan Stanley Dean Witter analyst Rich Bilotti, who upgraded the stock to “outperform” from “neutral” Tuesday morning and set out a 12-month price target of $36-$40 for the shares. Federated Investors analyst Angela Auchey was bullish as well, setting her target price as high as $44 over the next 12 months.
Bilotti cited stronger ratings at ABC, flush from the smashing success of “Who Wants to Be a Millionaire,” the box office success of “Toy Story 2” and attendance gains at Disney World. He also noted, as other Wall Streeters have done of late, that the Mouse has started to make the strategic changes necessary to produce a turnaround in its weaker businesses.
Dismal performances from licensing, merchandising and homevideo have eroded Disney earnings in recent quarters and resulted in a hefty drop in net income for the company’s latest fiscal year, despite the studio’s box office muscle. The shares hit a 52-week low of just over $23 in November. Even with recent gains, they’re still below their high for the period of $39.