Shares of Walt Disney Co (DIS.N) were hammered on Wednesday as Wall Street worried how the company's steady-growth media and resort businesses would fare if consumers get pinched in a weak economy.
Disney shares closed 9.1 percent lower at $31.54 after falling nearly 15 percent earlier in the session, one day after the company's quarterly results failed to inspire investors already nervous about theme park revenue and the sustainability of an advertising rebound.
Several brokerages lowered expectations. Barclays Capital, Wunderlich Securities, RBC and Evercore Partners all cut their price targets and lowered forecasts for those core divisions.
"Given an uncertain consumer, we are taking a more conservative stance on our estimates going forward," including lowering estimates for ESPN advertising revenue, said Barclays Capital analyst Anthony DiClemente. He lowered his price target for Disney shares to $44 from $52.
The company's shares fell much more than those of rivals like Time Warner Inc (TWX.N), which dropped 4.6 percent. Disney lost some $6 billion in market value even after the shares recouped some of their losses in afternoon trading. They still finished with a considerably sharper drop than the 4.4 percent fall in the broader S&P 500.
The operator of theme parks, the ESPN sports and ABC broadcast networks and a movie studio is known for consistently beating analysts' expectations. But the company had reported a miss when it released fiscal second-quarter results in May.
In fiscal third-quarter results reported Tuesday, the Mouse House beat most analysts' expectations. But that came after it recorded some ESPN revenue that was expected in the fourth quarter.
Disney "has not lived up to the earnings-beatings behavior it is known for," Nomura Securities analyst Michael Nathanson said in a note to clients. He lowered his price target on the shares to $42 from $45.
Disney executives told analysts the company is not seeing any advertiser downturn at its TV networks, and hotel bookings were down 2 percent less than the company had forecast.
But they also warned about higher programing and production costs at ESPN, lower syndication sales at ABC and tough year-over-year comparisons for its studio division in the fourth quarter.
Wunderlich Securities analyst Matthew Harrigan lowered his rating on Disney to "hold" from "buy," saying the company's asset value appeared "excessively ... oriented toward ESPN."
"Disney has major upside off better monetization of Disney Pixar, Marvel, ABC, and the parks, but this hinges on creative execution and the economy," Harrigan said in a note to clients.
RBC Capital Markets analyst David Bank, who cut his price target to $43 from $48, said ESPN ad growth and margins at theme parks were "softer than expected" in the just-ended quarter.
"While years of execution justify 'best of breed' premium valuation, we think several quarters of 'misses' could make it somewhat vulnerable," Bank said in a research note.