Don’t Buy the Disney Pullback Just Yet

Don’t buy the dip in Disney (SYM: DIS) just yet.

Over the last few days, Disney gapped from about $117 to a low of $105.58. All thanks to disappointing guidance.

According to the company:

“We’re pleased with the progress we’re making in streaming although as we said before, the path to long-term profitability is not a linear one,” Chief Financial Officer Hugh Johnston said, as quoted by Barron’s. “On that note, we are forecasting a loss for entertainment direct-to-consumer in the third quarter. We also do not expect to see core subscriber growth at Disney+ in the third quarter but anticipate sub-growth will return in Q4.”

That’s part of the reason the DIS stock tanked.

But according to Barclays, the pullback is overdone.

For one, according to Barclays, the concerns about theme park operating income is overblown. Two, the firm is still optimistic about Disney’s streaming segment results. And three, the firm is still overweight on the DIS stock with a price target of $130.

But we wouldn’t buy Disney just yet.

Instead, we’d wait for confirmation of trend change before doing so.

In fact, that’s the safe way to approach the Disney stock.

You see, if the stock fails to hold $105.29, where it’s trying to form a new base, it could refill its bullish gap at around $100 next. Of course, that’s worst case. But it’s also why it’s better to wait for confirmation of potential upside first. Unless you like losing money…

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