Walt Disney (NYSE:DIS) shares were downgraded to Underweight from Neutral, with a new price target of $76 per share, down from $113 at Atlantic Equities on Tuesday.
Atlantic analysts told investors in a note that the downgrade is due to ad declines and the entertainment company's DTC traction.
The analysts explained that they believe we are at a "negative tipping point in linear TV advertising," which the firm estimates will shave almost $1 billion off of Disney's 2026 forecast operating income.
"We have also looked at the popularity of the company's key Marvel, Star Wars, and Pixar franchises and, in virtually every case, have seen a degradation in performance," they said.
"Coupled with a pullback in general entertainment content spend, we believe this will impact the company's DTC subscriber growth, and we are now pushing out our estimate for unit break-even from 2025 to 2026. Our 2024/2025/2026 EPS estimates come down 20%, 28%, and 31%, respectively, and we now sit 29%, 33%, and 36% below consensus, respectively," they concluded.