Walt Disney Co. (DIS) has reached an agreement to furlough about 43,000 union workers as its World Resort theme parks remain closed due to the coronavirus pandemic.
In the accord with the U.S. Service Trades Council Union, the furloughs of the Walt Disney World union workers in Orlando, Florida are set to start on April 19. Under the terms of the agreement, the media and entertainment giant will continue to pay union workers health and insurance benefits. About 200 workers, who are deemed essential, will remain on the job during the closure, the union said.
Walt Disney has closed theme parks, suspended cruises and theatrical shows, delayed theatrical distribution of films both domestically and internationally, and experienced supply chain disruption and advertising sales impacts. It also had to cancel certain sports events and shut down the production of most film and television content.
Walt Disney shares rose 3.4% to $104.50 a share in U.S trading on Thursday, after the media and entertainment giant, said its its Disney+ streaming video service has surpassed 50 million subscribers.
Three-star analyst Alexia Quadrani at JPMorgan said she was “impressed by the surprise announcement” of the 50 million subscribers for Disney. The announcement came as Wall Street analysts have been cutting estimates for the company’s other businesses, such as amusement parks and studios, Quadrani added. JP Morgan last week reiterated Walt Disney’s Buy rating with a price target of $140.
Overall Wall Street analysts have a Moderate Buy consensus rating on Disney as 17 out of 23 recommend investors buy its shares, and 6 say Hold the stock. At an average price target of $134.67, analysts see room for 29% upside potential to the stock in the coming year. (See Walt Disney stock analysis on TipRanks)
In March, Walt Disney issued a performance warning and said it raised almost $6 billion in a debt offering, as the impact of the coronavirus outbreak is putting its cash flow position under strain.
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