Disney Stock Dips on ‘Cars’ Opening
Shares of Walt Disney Co. dipped slightly Monday, then rebounded, reflecting lower-than-expected ticket sales during the opening weekend of the Pixar animated film “Cars.”
Shares closed down 43 cents, or 1.5%, to $28.90, but had dropped as much as 85 cents, or 3%, earlier in the day. Shares of Disney have risen 21% this year.
“Cars” was Pixar Animation Studios’ first release since it was purchased by Burbank-based Disney for $7.4 billion. The film was estimated to have brought in $62.8 million, making it the top movie at the weekend box office, but confirmed figures released Monday put ticket sales lower, at $60.1 million.
That was even less than the $70 million or so some analysts had expected. It also fell short of three other Pixar debuts: “The Incredibles” at $70.5 million in November 2004, “Finding Nemo” with $70.3 million in May 2003 and “Monsters, Inc.” at $62.6 million in November 2001.
“We think the expectations for ‘Cars’ were heightened by Disney’s acquisition of Pixar, and that investors could perceive the film’s performance as an early indicator of the benefits of the purchase,” Vijay Jayant, an analyst with Lehman Bros., wrote Monday.
Jason Bazinet, an analyst with Citigroup, downgraded Disney’s stock from a “buy” to “hold” late Friday, but said his decision had nothing to do with the performance of “Cars.”
Bazinet cited expectations for lower theme park attendance in 2007. The analyst said Monday that he still expected the film to take in as much as $650 million worldwide.
Soleil Securities analyst Laura Martin raised her 12-month stock forecast to $35 from $32 because of strength at Disney’s ABC television network and in the company’s theme parks.
Analyst David Miller of brokerage Sanders Morris Harris also did not change his estimate of $600 million worldwide, despite the fact that “Cars” opened lower than the $75 million to $80 million he had expected.
Miller said “Cars” earned less than “The Incredibles” and “Finding Nemo” because it was the longest Pixar film at two full hours. That limited its run at theaters to five screenings a day. Shorter animated films can usually be shown six times a day.
Miller added that only 55% of schools were out for the summer last weekend. In two weeks, that proportion will rise to 90%, which should benefit “Cars” ticket sales.
Anthony Noto, an analyst with Goldman Sachs, wrote in a note to clients Sunday that he still expected the movie to be “highly profitable,” and he reaffirmed a rating of “outperform/neutral” on Disney shares and a target price of $34.