Analysts React to Disney Earnings; Fossil Stock Sells Off Yet Again

Disney is removing its content from Netflix

Josh Selway
Aug 9, 2017 at 9:24 AM
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Analysts are weighing in on Dow component Walt Disney Co (NYSE:DIS),  theme park stock SeaWorld Entertainment Inc (NYSE:SEAS), and accessories maker Fossil Group Inc (NASDAQ:FOSL). Here's a quick roundup of today's bearish brokerage notes on shares of DIS, SEAS, and FOSL.

Disney Stock Crushed After Netflix Announcement

Although Disney's adjusted earnings per share topped estimates for the company's fiscal third quarter, continued weakness from its cable business has the stock pointed 6.3% lower in pre-market trading. Even more importantly, the media giant announced it'll be launching standalone streaming services for its ESPN content and other original Disney shows in the coming years, while pulling its content from Netflix. In response, Credit Suisse lowered its price target to $120 from $125, and MoffettNathanson trimmed its price target by $3 to $127. 

DIS stock settled at $106.98 yesterday, just above its 200-day moving average and year-to-date breakeven level. But with the shares ready to open in territory not see since early December, more bearish analyst notes could come through. At the moment, 11 brokerage firms recommend buying the equity, compared to eight "hold" or "strong sell" ratings. 

Analysts Cut Outlooks on SEAS Stock Following Earnings Sell-Off

SeaWorld stock sold off yesterday due to disappointing earnings, with the shares touching a record low of $11.10, before settling at $12.76. SEAS could be under pressure again today, following price-target cuts from J.P. Morgan Securities (to $13), Stifel (to $16), and SunTrust Robinson (to $16), though the latter firm maintained its "buy" recommendation. 

Shares of SeaWorld have essentially been descending since the company went public back in 2013, and short sellers would love to see these struggles persist. Going by average daily volumes, short interest on SEAS represents nearly two weeks' worth of buying power. 

FOSL Shares Destroyed in Pre-Market Trading

For the second straight quarter, Fossil stock is ready to get crushed after earnings, with the shares pointed 24.8% lower in pre-market action. The watch specialist reported a loss for the second quarter, on top of the departure of its CFO. Adding salt to the wounds are price-target cuts from Tesley Advisory, Jefferies, and Wells Fargo, with the latter setting the lowest mark of $7 -- territory not seen since late 2001. 

Looking back, Fossil stock has been grinding lower since late 2013, closing yesterday at $11.84. As such, options traders have been betting on more downside, according to data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). FOSL has a 10-day put/call volume ratio of 6.09 across these exchanges, good enough to rank in the 95th annual percentile, meaning put buying has been unusually popular in recent weeks. 


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