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Walt Disney World and other Disney theme parks may remain closed for the rest of this year, a financial analyst from UBS estimated this week, citing health and economic concerns fueled by the coronavirus pandemic.
The profitability of the Burbank, California-based company's parks division "will be impaired for a longer period of time, given the lingering effects of the outbreak," John Hodulik, managing director of investment research at UBS, said in a note to clients. He now projects the parks will reopen in January.
The division accounted for about 35 percent of Disney's $20.9 billion in revenue in the quarterly earnings period through Dec. 28, the most recent for which it has filed financial statements.
"The economic recession plus the need for social distancing, new health precautions, the lack of travel and crowd aversion are likely to make this business less profitable until there is a widely available vaccine," Hodulik noted.
Disney didn't immediately return a request for comment from FOX Business. The entertainment giant, which typically gets between 50,000 and 60,000 visitors at its parks per day, closed its U.S. resorts indefinitely on March 27 due to the coronavirus outbreak.
Earlier this week, Disney said it would stop paying more than 100,000 of its employees -- almost half of its staff -- as it the shutdown chokes revenue.
Suspending pay for its workers will allow the entertainment giant to save up to $500 million, the Financial Times reported. Disney reportedly chose to keep its executive bonuses, which usually include dividends, according to the Times.
Hodulik slashed his 12-month target price for the stock from $162 to $114, citing the economic effects the aftermath of COVID-19 will have on the business. The shares have tumbled 30 percent this year to $100.88 as of Thursday afternoon.
|DIS||WALT DISNEY COMPANY||116.75||-4.78||-3.93%|
“It’s not just the theme parks, the box office is an issue with the theaters closed, ESPN with no live sports is an issue for the company,” Hodulik told Fox Business’ Stuart Varney on Thursday. “We have worries about what the outbreak is going to do for the company and also what are the lingering economic effects going to do at the company.”