Analyst moves keep Disney stock in slump

Asian woes, sports rights cited

The Walt Disney Co.’s recent stock slump accelerated Thursday after Wall Street firm Schroders reduced its rating on the stock and cut its earnings estimates.

Disney closed down $2.37 to $116.12 after Schroders took Disney off its recommended list, while maintaining a positive rating, and cut its fiscal 1999 earnings estimate by 7% to $3.48 a share.

Disney’s stock, which last week was trading above $127, has now fallen 9% since Goldman Sachs analyst Richard Simon reduced his fiscal 1998 and fiscal 1999 estimates May 7.

High-price worries

Simon, who kept Disney on Goldman’s recommended list, cited worries about Disney’s recent price rise which, took the stock from around $110-$115 to its highs of around $128. Simon said he was concerned about the impact of the Asian economic crisis, costs of Disney’s football rights deals and the “ABC advertising environment.”

Schroders analyst David Londoner said he cut fiscal 1999 earnings estimates because of worries about broadcasting division earnings.

Londoner said the advertising upfront market looked like it was “going to be very soft,” which was a worrying sign for the ABC network. The sports rights deals were also a factor.

Fractional trim

Londoner noted his revised fiscal 1999 estimate still assumed an increase of 12% on fiscal 1998 earnings. He trimmed his estimate for Disney’s fiscal 1998 earnings fractionally.

Both Londoner and Simon stressed they were positive about Disney from a long-term perspective. A spokesman for Disney declined comment on the estimate revisions.

Meanwhile Disney filed documents with the SEC Thursday allowing it to raise as much as $5 billion in unspecified securities at some point in the future. No date for any offering was set.

(Richard Morgan contributed to this report.)