Disney Shares Take a Dive : Wall Street: Heavy selling by Japanese and others is blamed. Several investment houses have removed the stock from their ‘recommended’ lists.

Walt Disney Co. shares plunged Wednesday under the weight of heavy selling by Japanese and other investors, apparently in reaction to lower earnings projections for the high-flying firm.

The Burbank-based entertainment company’s market price tumbled $11.375 a share, closing Wednesday at $112 after a day of extremely heavy trading. It was the lowest price for Disney shares since the Oct. 13 market reversal that sent the Dow Jones industrial average down 190 points.

It also capped a three-day selloff of Disney shares that shaved the company’s market price nearly 14%. The stock fell $4 on Monday and $2.625 on Tuesday.

A Disney spokesman said he knew of no reason for the price plunge. “We don’t comment about movements in the stock, but there has been absolutely no change in our business prospects,” Senior Vice President Erwin Okun said.

Analysts attributed the plunge to a variety of factors, including a selloff of the stock by Japanese investors, who had previously helped to boost Disney’s share price to all-time highs.

At the same time, several investment houses either pared earnings estimates on Disney or dropped it from their recommended lists. Shearson Lehman Hutton cut its fiscal 1990 earnings estimate for Disney by 10 cents a share to $6.35. Crowell, Weedon & Co. trimmed its first-quarter estimate by 5 cents a share. And Goldman, Sachs & Co. removed Disney from its recommended list.

The Japanese selloff had been expected since rumors surfaced that the Japanese central bank would soon be raising its discount rate, a rumor that was denied by the Bank of Japan. A hike in the discount rate would make domestic bond yields more attractive, so there has been widespread speculation that the Japanese would start liquidating U.S. stocks to invest at home. Earlier in the year, they were heavy buyers of Disney shares.

However, the analysts may have exacerbated the problem by revising earnings estimates downward this week--the first bout of bad news to hit Disney’s stock all year.

“When a stock has had nothing but good news, any hint of trouble can create a herd-selling effect, particularly in that it is year-end and a lot of people are considering taking their profits,” said Paul Marsh, analyst with Bateman Eichler, Hill Richards Inc. in Los Angeles.

Analysts said their revised opinions about the company stemmed from worries about Disney’s lackluster box office performance in recent months, with disappointments such as “Gross Anatomy” and “An Innocent Man.” Analysts also expressed concern about a possible decline in theme park attendance next year, both from a possible economic slowdown and from increased competition in Florida after MCA opens a studio attraction there.

Moreover, they said the company’s stock price had just gone too high, too fast and was due for a slump.

“The stock got ahead of itself,” said Harold Vogel, entertainment analyst with Merrill Lynch & Co. in New York. “Disney was regarded as a bullet-proof story that recession couldn’t dent. On a long-term basis, it is probably still the stock of the decade. But on a near-term basis, there is some indication that the company’s growth is slowing.”

Analysts particularly point to Disney’s release last week of “Blaze,” starring Paul Newman, which was expected to be a box-office smash. During its first five days of release, the film grossed only about $1.7 million, according to Daily Variety. That’s far behind the current leaders, “National Lampoon’s Christmas Vacation” and “The War of the Roses,” which grossed about $7 million each in the same period.

Still, most analysts still consider Disney a good long-term buy. The steepness of the stock slide was simply an overreaction, some said.

“You don’t need to take 10% off the market capitalization of Disney because their earnings may be down a nickel,” said Jeffrey Logsdon, analyst with Crowell, Weedon & Co. in Los Angeles. “I would say it’s an overreaction. But that’s how Wall Street is these days.”