Disney is on the brink of a steep downturn in some of its key segments, which could put pressure on the stock, Atlantic Equities said. The firm downgraded Disney stock to underweight Tuesday and lowered its price target to $76 per share from $113. The firm's new forecast now implies a 12.2% decline from Monday's $86.60 close. Analyst Hamilton Faber said lower advertising expectations and disappointing performance from some of the company's franchises, including Marvel, underpinned the downgrade. "Box office performance has also struggled with a clear decline from the 2019 Avengers: Endgame series climax," Hamilton said. "While the cyclical nature of the MCU films means this should be expected, whether Marvel can build to a second Avengers climax in 2026 is wholly dependent on the performance of current films, and indications are not encouraging." The franchise's latest "Antman" installment saw the largest second-week box office drop-off ever for Marvel Studios . However, the most recent "Guardians of the Galaxy" film, released this year, hauled in more than $800 million at the box office, according to Box Office Mojo . Hamilton added that a hit to Disney's direct-to-consumer segment, which houses Disney+, will also continue to be a headwind — especially as advertising spending remains sluggish. "As the current upfront comes to a close, reports are emerging that entertainment pricing is down by as much as 5%," he said. "With linear TV ratings continuing to decline fast across general entertainment, and without the usual price gains that have been seen over the past 15 years, it is clear advertising is set to fall far faster than we have seen previously." Disney stock has slipped less than 1% from the start of the year, lagging the S & P 500's 18.6% gain. DIS YTD mountain Disney stock is down less than 1% in 2023. — CNBC's Michael Bloom contributed to this report.
