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As some states and cities in the US USA They begin to allow parts of their economies to reopen amid the new coronavirus pandemic, uncertainty reigns. Retailer J. Crew Group filed for bankruptcy protection on Monday, the first national retailer to be brought down by the pandemic. There are likely to be more bankruptcies, in the retail sector and in other industries, as it continues to affect the US economy. USA the Dow Jones Industrial Average (DJINDICES: ^ DJI) it was down 0.93% at 10:55 a.m. of Monday.
Actions of Disney (NYSE: DIS) it crashed to start the week after an analyst warned of a slow recovery for the entertainment giant. Meanwhile, the actions of Intel (NASDAQ: INTC) They declined only modestly, as the company weighs in on a $ 1 billion acquisition.
Disney downgraded by pandemic uncertainty
While the Disney + streaming service is proving to be a huge success for the entertainment conglomerate, an analyst at MoffettNathanson downgraded Disney’s shares on Monday due to weakness in its other businesses. Analyst Michael Nathanson believes that the uncertainty related to the pandemic creates significant risk of profit for the foreseeable future.
Image Source: Disney.
Nathanson downgraded its Disney stock rating from buy to neutral, and lowered its target price from $ 120 to $ 112. The analyst expects the economic impact of the pandemic at Disney to last longer than most expect, particularly given the risks associated with a second wave of the virus.
Currently, Disney’s American parks are closed due to the pandemic. Movie theaters across the country are also closed, eliminating Disney’s ability to release new movies outside of digital channels. In fiscal 2019, the parks, experiences and products segment accounted for 38% of Disney’s revenue, while the studio entertainment segment generated 16% of revenue.
Nathanson sees the parks segment experience a 33% decrease in revenue this fiscal year, which ends in September. The analyst doesn’t see a rebound until fiscal year 2022. Earnings before interest and taxes for the segment will fall 65% this year, according to Nathanson’s estimates. For the film segment, Nathanson predicts a 23% decrease in revenue and a 20% decrease in earnings in 2020.
How much Disney is suffering this year depends on when the company can reopen its parks, the severity of a second wave of the virus, and consumers’ appetite for air travel and crowded environments. It’s not hard to imagine potential guests putting off visiting Disney properties until the storm subsides, even if the parks are open to the public.
Disney shares fell 3.7% on Monday morning. The stock is now down approximately 34% from its 52-week high. The company plans to report its second-quarter tax results on Tuesday.
Intel considering $ 1 billion acquisition
Over the weekend, it became known that the chip giant Intel was in advanced talks to acquire Moovit, an Israeli-based startup that publishes a free mobile app to help people plan trips through various modes of transit. , including public transport, scooters and carpooling. The application is currently used by approximately 800 million people worldwide.
Intel is reportedly expected to pay around $ 1 billion for the company, and the deal is expected to close in the coming days. While no one at Intel or Moovit has confirmed the talks, TechCrunch said the Moovit spokesman did not deny the reports.
The Moovit acquisition could be beneficial to Intel’s efforts in autonomous vehicles. While many challenges must be faced before autonomous cars are truly ready for primetime, Moovit provides real-time traffic data and routing technology that could help the cause. In 2017, Intel paid $ 15.3 billion for Mobileeye, another Israel-based company focused on computer vision and machine learning for advanced driver assistance and autonomous driving systems.
Intel shares fell 0.6% on Monday morning. Shares of the chip giant have now dropped approximately 17% from their 52-week high.
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