#Disney may not rebound from the pandemic for at least a year

Disney’s theme parks and movie studios won’t be back in full force until at least the middle of next year, according to a Wall Street analyst’s gloomy prediction.

Cowen analyst Doug Creutz said Thursday that Disney’s theme parks and its box office-busting movie division — which includes its namesake studio, Marvel, Pixar and 20th Century Studios — will take a lengthier-than-expected hit from the pandemic.

The analyst, who downgraded Disney’s stock from “outperform” to “market perform,” cited the rampant spread of COVID-19 across the US, particularly in Florida and California, the respective homes of Disney World and Disneyland.

“We had previously assumed that the spread of COVID-19 would be relatively halted, with social distancing requirements significantly lessened by late 2020,” Creutz said. “We have now extended that timeline out to at least mid-2021; the situation remains very fluid, and we do not rule out the possibility that the impact could last even longer.”

The analyst anticipates continued curbs on how many people are let into the parks and even forced closures if the virus continues to spread. He pointed to Disney World, which reopened last weekend at limited capacity, as well as to Hong Kong Disneyland, which, after being open a month, closed again last week due to a resurgence of COVID-19 cases in the city.

As for Disneyland in California, Creutz expects the park to remain closed and take a “cautious” approach. As a result, he said profitability at Disney’s US-based theme parks won’t return to 2019 levels until fiscal 2025.

Meanwhile, the movie business is also getting dinged by the virus, as many studios have decided to delay the premiere of their blockbuster films. Ailing movie theaters have been pinning their hopes on the release of Warner Bros.’ “Tenet” and Disney’s “Mulan” this summer. Neither studio has yet pulled their film, but analysts are anticipating the move.

Creutz agreed, adding that he doesn’t expect any film releases in 2020 and that in 2021, he expects “a modest slate,” which will have a devastating impact on cash-strapped movie houses like AMC, Regal and Cinemark.

“We now expect domestic theaters to be largely closed until mid-2021, in part because we don’t think studios will be interested in releasing their largest movies into a capacity-constrained footprint,” he said. “Even if theaters are theoretically willing or able to reopen on a limited capacity basis, we don’t expect studios to release their blockbuster films into a significantly reduced market, which in turn suggests that the theaters won’t be able to actually open.”