Disney stock falls on downgrade despite 'Star Wars' debut

As of this writing, Disney stock is down almost 4% to 107.64, despite the record breaking performance of Star Wars: The Force Awakens.

Walt Disney Co's shares slumped after BTIG analyst Richard Greenfield cuts his rating to "sell" from "neutral", saying the likely success of the latest Star Wars movie would not be enough to offset the impact of subscriber losses at ESPN. BTIG has a price target of $90 on the stock. That was worse than the 2.1 percent decline in the Dow Jones industrial average.

Greenfield argues that its flagship ESPN network paid too much for sports rights in an effort to thwart rivals Fox Sports 1 and NBC Sports, which will trim profitability at cable network operations that represent 44 percent of Disney's operating income.

He also says Disney damaged its long-term prospects for cable in general "by aggressively licensing content to SVOD platforms such as Netflix to prop up near-term earnings".

That could give TV viewers further reasons to drop or trim their traditional pay TV packages and rely on online services for their entertainment, which are seen as less lucrative for media companies.

Of course it's not all doom and gloom for Disney (not by a long shot), as the stock is up 10 percent from its August low, when the company first warned of slowing growth at its television segment.

The long-awaited latest installment of the Star Wars saga - Star Wars: The Force Awakens - opened nationwide in more than 4,100 theaters Friday, and with more than $100 million in advanced ticket sales is expected to break box office records.

While we believe the strength of Star Wars Episode VII: The Force Awakens (estimated at $2.6 bn in global box office) will lead to Disney modestly exceeding consensus expectations for fiscal (Sept) 2016 earnings, we now believe consensus earnings are too high for FY2017 and far too high for FY2018.