The Disney theme parks could be facing another “lost year” in 2021 according to an analyst’s new report after an almost $10 billion drop in revenue in 2020 due to the COVID-19 pandemic.
Disney stock was upgraded by Deutsche Bank analysts based on the strength of the Disney+ streaming service although the company’s theme park and consumer products division continued to struggle.
“At this point, we are assuming that FY21 (beginning 10/1/20) will be another ‘lost year’ for Disney’s theme parks and consumer products division, according to the Deutsche Bank analysts’ report.”
Disney’s theme parks in Florida, Tokyo, Shanghai, and France have reopened after their extended coronavirus closures. After being reopened for less than a month, Hong Kong Disneyland closed again in mid-July amid a spike in COVID-19 cases in the city. Disneyland and Disney California Adventure have yet to reopen or even announce a reopening date.
According to the Deutsche Bank report, Disney Parks, Experiences and Products division revenue is projected to decline $9.8 billion in the fiscal year 2020. Additionally, “Disney theme park revenue isn’t expected to bounce back to pre-pandemic levels until 2023.”
“We assume [a] substantial improvement in FY22, but with revenue still not fully back to the FY19 level,” according to the report. “We assume a return to full parks earnings power in FY23.”
The good news is that Deutsche Bank is anticipating that the Disney theme park division will significantly rebound by fiscal year 2025 with revenues at around $10 billion higher than it was pre-pandemic. The report also mentions that they “don’t expect Disney’s theme parks to see a full recovery until a COVID-19 treatment and vaccine are widely available.”
We believe the recovery in theme park attendance is progressing, albeit gradually. We believe this trend will continue as new COVID cases in Florida decline.
Source: The Orange County Register