Media shares and markets opened higher Tuesday after a sickening plunge the day before saw the DJIA’s worst point loss ever and a rare circuit breaker temporarily halt trading. Walt Disney joined the rally, up more than 3% in mid-morning, shrugging off a report that the conglom’s domestic parks will likely need to shutter on coronavirus fears.
“In the COVID-19 era, the most common and difficult question for media investors has been: at what price do DIS shares become interesting? Our answer is “we’re getting pretty close,” but believe there is still more bad news to get out of the way. We expect the domestic parks to shut down. Perhaps that will be the day to start buying DIS shares,” wrote Bernstein analyst Todd Juenger in a morning note.
His report was, tellingly – given uncertainty surrounding the outbreak and the markets – titled, ‘Disney DIS): The definitive complete guess to the impact of COVID-19.’ He has a market-perform rating on Disney and a price target of $119 per share, from$141. The shares are changing hands at around $107.
Disney has closed parks in Shanghai, Hong Kong and Tokyo and is carefully monitoring Paris after reports that one worker there tested positive for coronavirus. The Shanghai Disneyland Resort partly reopened Monday although the park remains closed. China said today it had “curbed” the disease in the city of Wuhan and Hubei Province, the epicenter of the outbreak. However, the virus’ impact on the rest of the world is still an open question. The entire country of Italy is on lock-down and cases continue to rise in the U.S. amidst fears that widespread testing will reveal many more.
Basically, market players still have little visibility if the U.S is facing a temporary jolt or a recession, the uncertainty giving rise to wild swings in stock prices from day to day.
On Tuesday, investors decided to see the glass half – or at least a tiny bit – full after President Trump indicated there would be some form of fiscal relief for workers and aid to businesses impacted. Markets also appeared to have gotten over their initial shock Monday at a sudden oil price war between Saudi Arabia and Russia that weighed on the indexes.
In morning trade the DJIA was up more than 700 points, or 3%.
Media stocks flanked Disney, moving up across the board and eroding at least some of Monday’s losses. The biggest gainers included hard hit theater chains Imax, rebounding by 6% and AMC Entertainment, trading up 5.3%. Lionsgate was up close to 4% % and ViacomCBS close to 3%. Tech gained with Twitter rising 6%, Apple up 5%, Facebook up 3.6% and Google up about 2.5%.