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Disney Shuts Shanghai Park, but Analyst Doesn't See a Big Hit to Earnings

Connor Smith Consumer DIS Walt Disney Broadcasting Cable Broadcasting Theaters/Entertainment Venues Amusement Parks/Arcades Leisure/Arts/Hospitality Media/Entertainment Alexia S. Quadrani Asia Pacific Asia BRICS Countries China Greater China Emerging Market Countries Developing Economies Eastern Asia Shanghai Financial Performance Earnings Analysts' Comments/Recommendations Corporate/Industrial News Equity Markets Commodity/Financial Market News Content Types Factiva Filters C&E Exclusion Filter C&E Industry News Filter DIS HULU.XX I/BRD I/RCS I/XFFX M/LEAH M/MENT N/ANL N/ARG N/CNW N/DJN N/ERN N/MKT N/PFM N/STK N/WER R/ASI R/CH R/FE R/FEO Barrons.com Barrons Blogs Wires Fortune 500 S&P 500 index SPX CODES_REVIEWED Companies Consumer Markets author Connor Smith author|Connor Smith topicid 8589 name Connor Smith extractedtext Connor Smith rank 1 codetype author code connor_smith nameformat surname_first author Connor Smith id Connor Smith barrons_display_subject BARCONSUMER barrons_display_subject|BARCONSUMER codetype BARRONS_DISPLAY_SUBJECT canbedisplaysubject true value BARCONSUMER source MANUAL status modified name Consumer code BARCONSUMER co wdpr co|wdpr 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editorial-seo-id|disney-shanghai-park-closed-coronavirus-china-earnings-51580144861 first_publish_headline Disney Shuts Shanghai Park as Coronavirus Spreads, but Analyst Doesn’t See a Big Hit to Earnings first_publish_headline|Disney Shuts Shanghai Park as Coronavirus Spreads, but Analyst Doesn’t See a Big Hit to Earnings flow NWREGULAR flow|NWREGULAR codetype FLOW value NWREGULAR source MANUAL status modified name Wires code NWREGULAR flow Barrons.com flow|Barrons.com codetype FLOW value Barrons.com source MANUAL status modified name Barrons.com code online name Online title Product code Barrons.com flow Barrons Blogs flow|Barrons Blogs codetype FLOW value Barrons Blogs title Product source MANUAL status modified name Barrons Blogs code Barrons_Blogs headline Disney Shuts Shanghai Park as Coronavirus Spreads, but Analyst Doesn’t See a Big Hit to Earnings headline|Disney Shuts Shanghai Park as Coronavirus Spreads, but Analyst Doesn’t See a Big Hit to Earnings idx xf500 idx|xf500 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Quadrani source FACTIVA codetype pe code alexia_s_quadrani nameformat surname_first re china re|china significance prominent name China why about source FACTIVA subcat cntry fcode china codetype re code china onlinesignificance prominent re chinaz re|chinaz significance prominent name Greater China why about source FACTIVA subcat sc fcode chinaz codetype re code chinaz onlinesignificance prominent re shahai re|shahai significance prominent name Shanghai why about source FACTIVA subcat sp fcode shahai codetype re code shahai onlinesignificance prominent re apacz re|apacz name Asia Pacific why lineage source FACTIVA subcat snr fcode apacz codetype re code apacz re asiaz re|asiaz name Asia why lineage source FACTIVA subcat snr fcode asiaz codetype re code asiaz re bric re|bric name BRICS Countries why lineage source FACTIVA subcat eco fcode bric codetype re code bric re devgcoz re|devgcoz name Emerging Market Countries why lineage source FACTIVA subcat eco fcode devgcoz codetype re code devgcoz re dvpcoz re|dvpcoz name Developing Economies why lineage source FACTIVA subcat eco fcode dvpcoz codetype re code dvpcoz re easiaz re|easiaz name Eastern Asia why lineage source FACTIVA subcat sc fcode easiaz codetype re code easiaz relay SYND relay|SYND name Syndication source EXPANDER value SYND codetype RELAY code synd status modified statistic CODES_REVIEWED statistic|CODES_REVIEWED name CODES_REVIEWED value CODES_REVIEWED codetype STATISTIC code CODES_REVIEWED subject BARCONSUMER subject|BARCONSUMER ruleid BARCONSUMER codetype SUBJECT value BARCONSUMER canbedisplaysubject true name Consumer title Consumer status modified code BARCONSUMER subject BARMKTS subject|BARMKTS ruleid BARMKTS codetype SUBJECT value BARMKTS selectable true canbedisplaysubject true name Markets title Markets status modified code BARMKTS subject BARCOMP subject|BARCOMP ruleid BARCOMP codetype SUBJECT value BARCOMP canbedisplaysubject true name Companies title Companies status modified code BARCOMP wordcount 549 wordcount|549 id facebook id|facebook news_tab_url https://www.barrons.com/articles/disney-shanghai-park-closed-coronavirus-china-earnings-51580144861 Photograph by Qilai Shen/Bloomberg Disney Shuts Shanghai Park as Coronavirus Spreads, but Analyst Doesn’t See a Big Hit to Earnings Disney Shuts Shanghai Park as Coronavirus Spreads, but Analyst Doesn’t See a Big Hit to Earnings Disney Shuts Shanghai Park for Coronavirus, but Analyst Doesn’t See a Big Hit to Earnings

J.P. Morgan analyst Alexia S. Quadrani estimates the park contributes $1 billion in revenue and about $50 million in operating profit annually to Disney. Disney Shuts Shanghai Park, but Analyst Doesn’t See a Big Hit to Earnings

Walt Disney Co. has temporarily closed its Shanghai Disneyland park because of the outbreak of coronavirus in China. https://www.shanghaidisneyresort.com/en/ https://www.barrons.com/articles/stocks-moving-premarket-delta-air-lines-wynn-resorts-amd-51580129131?mod=hp_LEAD_1 https://www.barrons.com/articles/hong-kong-rising-tensions-us-investors-51573499489 mailto:connor.smith@barrons.com Disney Shuts Shanghai Park as Coronavirus Spreads, but Analyst Doesn’t See a Big Hit to Earnings By Connor Smith Photograph by Qilai Shen/Bloomberg Shanghai Disneyland had 11.8 million guests in 2018, with half visiting from outside the region.

Walt Disney Co. has temporarily closed its Shanghai Disneyland park because of the outbreak of coronavirus in China.

The company said in a statement posted on the Chinese resort’s website that the decision is in line with prevention measures taking place across China. The company will help get refunds to guests who purchased tickets and booked resort hotel rooms.

“We are in close contact with health officials and the local government about the situation and will announce a reopening date once they determine it is advisable,” Disney said.

There have been 2,700 confirmed cases of coronavirus and 80 people have died, according to Chinese officials. The U.S. Centers for Disease Control and Prevention confirmed the fifth coronavirus case in the U.S.

The major U.S. stock indexes were down Monday morning, while the price of gold ticked up 0.8%.

J.P. Morgan analyst Alexia S. Quadrani called this a peak travel time for the resort, given the Lunar New Year and holiday season that extends into February.

The park had 11.8 million guests in 2018, with 50% visiting from outside the region, according to Quadrani, who estimates the park contributes $1 billion in revenue and about $50 million in operating profit annually to Disney.

Quadrani noted that the company has said weakness in Hong Kong would reduce operating income by about $80 million in the first quarter and $275 million in fiscal 2020.

“Due to the high fixed cost structure of the Parks operations, the closure of Shanghai Disneyland could actually have a bigger hit to profits, at least while it remains closed, as it has shut down entirely whereas Hong Kong Disneyland’s impact is during a period while the park is still open,” she wrote.

Quadrani also speculated that movie-theater closings that started in China on Thursday could affect Disney’s “Mulan” release in China, if they continue into March. Still, Quadrani maintains her Overweight rating and $160 price target on Disney stock, although she said she hopes to hear more when the company conducts anearnings callon Feb. 4.

“While there is little question these events will lead to some downward pressure on earnings, the magnitude of the revision is not likely to be sizable relative to the overall company’s earnings nor does it detract from investors’ main focus right now which is the likely outsized success of Disney’s DTC initiatives,” referring to the company’s direct-to-consumer offerings like Disney+, Hulu, and ESPN+.

Disney stock (ticker: DIS) was down 2.8% to $136.20 near midday Monday, while the S&P 500 index was down 1.4%.

Write to Connor Smith at connor.smith@barrons.com

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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