Granted, it's not been a really pretty time at the House of Mouse lately. Disney (NYSE: DIS) stock has taken a beating over the last couple of months, and sadly, with good reason. Disney stock has suffered from the loss of several different revenue streams all at once, and some of these are only just now coming back. The stock is also starting to recover, and make a play for its pre-pandemic levels. That's prompted Miller Tabak analysts to offer up a roadmap for when you should buy Disney, and when you should buy it like toilet paper in March.
When to Buy, and When to Buy Frantically
Disney's been having its best quarter since 2009, recovering almost 30% from its lows back in April thanks to a clear roadmap through the worst of the pandemic and a plan for getting things back up and running again. Yet looking at Miller Tabak's own roadmap, as expressed by its chief market strategist Matt Maley, it's not at all a good time to buy Disney.
Disney is experiencing, Maley noted, something similar to what happened back in late March. Investors frantically sold in the first quarter, and then there was a bounce in the stock price. Looking back at mid-March, we do see how the company went up from $91.81 on March 12 to $102.52 one day later...before finally hitting their low point of $85.76 11 days later.
This in turn means, Maley continued, that something similar could be in the works right now, just over a bit longer term; the company could be getting overbought and positioning for another pullback that investors should not get caught in if at all possible.
Stops On the Road Map
There are two key price points, Maley identifies, that should prompt buying Disney. The first marker to look for is when the share price hits $114. That's approximately the point that meshes with the company's 200-week moving average. Historically, Maley notes, this has provided “excellent support” for the company, so if you see shares at $114, it's a pretty good time to buy in. Given that Disney is currently running at $126.71, up just over $3 off its previous close as of this writing, you may be in for a wait.
The second point will require an even longer wait, but this point is special. The second buying point is if Disney shares hit $100 each. If this happens, Maley says, start buying. Start buying frantically, in fact; Maley suggests this is a time to “buy with both hands”.
Mile Markers You May Never See
The trouble with Maley's markers, as supported by Chantico Global CEO Gina Sanchez, is that sub-$100 Disney shares may be gone like a DVD back into the Disney Vault. Sanchez pointed out that Disney's comeback is looking pretty solid indeed, with approval from Florida to reopen four theme parks on July 11.
There are also signs the rest of the world is allowing Disney to reopen as well, though California theme park openings are still up in the air. However, some reports are showing that even the Anaheim parks are taking reservations for July 16, even if there are plenty of caveats hanging off such a date.
Here's the big problem for Miller Tabak's roadmap; it's like a roadmap that takes you to Miskatonic University by way of Atlantis; the mile markers may not actually appear on the map. With Disney reopening parks, some of its primary revenue generators are coming back on line. Sure, they'll be sluggish for a while, but it's hard to imagine the market being particularly harsh any time soon. If there's not clear turnaround by, say, the end of the year that might be different, but sluggish sales in July will hardly be punished.
What's more, we're likely to see all of Disney's other revenue streams start to kick back in as well. All of Disney's television properties and online operations may start picking up on ad sales as businesses frantically rehiring and de-furloughing need places to sell their goods again. It's a safe bet it will be pencils-up back at Marvel before too much longer too, and the movies can start getting produced again since you're no longer forbidden by law to be in a group of more than three people.
The recovery of Disney's revenue streams means the recovery of Disney itself. That recovery may sputter for a while, and be a bit patchy, but it's not exactly a long shot to see Disney at least get back to where it was in January. That makes Miller Tabak's roadmap one to file away, but one you may never actually reach.
Companies Mentioned in This Article
15 Stocks that Insiders Love
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