The mouse house is going digital.
Disney Stocks have been on the rise since the company announced on Monday that it was overhauling its media and entertainment businesses Focus more on streamingA remarkable move for a company that has seen few significant transitions in its 97 years.
The stock closed a little over 3% higher at $ 128.96 on Monday after Loop Capital upgraded it to buy from the hold as downside risks were limited.
“We expect investors to give Disney a ‘pass’ for both of them in the short term Covid-19 associated losses and increases [direct-to-consumer] Losses in the next few years, “wrote the company.
However, one trader is concerned that the shift could pose problems for Disney’s stock.
“I don’t like this at all. I don’t own it. I definitely wouldn’t buy this thing for $ 130,” Mark Tepper, president and CEO of Strategic Wealth Partners, told CNBC’s “Trading nation” on Tuesday. “Maybe I would be interested under $ 110.”
While he recognized that the company must pivot given its need struggles with its theme parksTepper warned that centralizing streaming “completely undermines the appeal of Disney + for investors.”
“The added value was that Disney wouldn’t have to spend a lot of money on content, which of course would help margins, and now it seems like they’re going in the opposite direction,” he said. “I’ve always seen Disney as a company that makes maybe five blockbusters a year of very high quality content. Now they have to dilute the quality so they can increase the quantity.”
In contrast to Tepper, who saw Disney’s uptrend not last long, chart analyst Craig Johnson said the stock had a lot of potential.
“We reversed a longer-term downtrend … and you can see that recent price action has returned and re-examined that downtrend resistance line that is now supported,” Johnson said in the same Trading Nation interview, citing on the diagram below.
“We’re starting to bounce back from that level, and in our view, a closing price above this level of 136 here on the stock will open stocks one more leg higher,” said Johnson.
The $ 136 level is roughly 5% above where Disney closed on Friday. Loop Capital’s announcement also raised the company’s price target for Disney to $ 150, which is roughly 16% above current prices.
“I wouldn’t rule Disney out just yet,” said Johnson. “Yeah, a transformation is underway. Yeah, it can get a bit messy. But I think if someone has it, Disney can. You have the content. You have the ability to do it. I would and Mickey Don’t rule out Minnie Mouse here. “