Walt Disney slips as KeyBanc downgrades to sector weight
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Walt Disney (NYSE:DIS) shares slipped fractionally in pre-market trading on Thursday as investment firm KeyBanc Capital Markets downgraded the media and entertainment giant to sector weight, citing several reasons, including worries about the Parks business.
Analyst Brandon Nispel said there are five reasons to "step aside," including the fact that expectations for the Parks business "appear high" and there are worries over stalled subscriber growth for Disney's direct-to-consumer business. 
Nispel also said ESPN's push to streaming will be "materially harder" than initially thought due to low willingness from consumers to pay. Other concerns include structural changes in content distribution and the fact that 2024 feels a lot like 2023 from a financial standpoint.
"We prefer to step aside, acknowledging meaningful uncertainty, and wait for further catalysts, as buying the dip has been a losing trade," Nispel wrote in an investor note.
Regarding the Parks business, which some on Wall Street have repeatedly pointed to as a bright spot for Disney (DIS), Nispel said revenue growth in the fiscal third-quarter and fourth-quarters are estimated to accelerate to roughly 6% and 8%, whereas it's possible growth slows down. 
"With the attendance data we are seeing, and per cap spending at 2% in [fiscal second-quarter], we can't say for certain attendance and per caps trends will stay positive," Nispel added.
Nispel also noted that Netflix (NFLX) is "clearly the leader" in the direct-to-consumer space, as Disney+ and Hulu subscriber growth have stalled, with the analyst expecting a net loss from the U.S. version of Disney+ and Hulu in the coming quarter.
"While [Disney] has started to drive pricing, we have yet to see [Disney] services separate from peers from a churn standpoint, though it arguably has had a bundling advantage," Nispel added.
Analysts are overwhelmingly bullish on Disney (DIS). It has a BUY rating from Seeking Alpha authors, while Wall Street analysts rate it a BUY. Conversely, Seeking Alpha's quant system, which consistently beats the market, rates DIS a BUY.
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