Disney theme parks face another ‘lost year’ in 2021, analysts forecast

Disney’s theme parks face another “lost year” in 2021 after a nearly $10 billion decline in revenue in 2020 due to the COVID-19 pandemic, according to a new analysts’ report.

Deutsche Bank analysts upgraded Disney stock on the strength of the Disney+ streaming service despite continuing struggles in the company’s theme park and consumer products division.

“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.

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SEE ALSO: Newsom: California making ‘a lot of progress’ toward reopening theme parks

Disney parks in Florida, Tokyo, Shanghai and France have reopened following extended coronavirus closures. Hong Kong Disneyland reclosed in mid-July amid a spike in COVID-19 cases in the city after being reopened for less than a month. Disneyland and Disney California Adventure remain closed indefinitely due to the pandemic.

Disney Parks, Experiences and Products division revenue is forecast to decline $9.8 billion in fiscal year 2020, according to the Deutsche Bank report. Disney theme park revenue isn’t expected to bounce back to pre-pandemic levels until 2023, according to the report.

“We assume 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: Deutsche Bank forecasts that the Disney theme park division will rebound significantly by fiscal year 2025 with revenue $10 billion higher than pre-pandemic levels.

SEE ALSO: Are California theme parks too risky to reopen?

The Deutsche Bank analysts don’t expect Disney’s theme parks to see a full recovery until a COVID-19 treatment and vaccine are widely available.

“We think there’s upside to our forecast if an effective COVID vaccine becomes widely available during the next six months,” according to the analysts report. “We continue to believe that a widely available treatment and/or vaccine is required for a normalization to full earnings power at the parks.”

Disney’s Florida theme parks reopened in mid-July just as the state was experiencing a spike in COVID-19 cases and hospitalizations. Since then, attendance at Disney’s World’s four theme parks has continued to see “incremental improvement,” according to Deutsche Bank.

“We believe the recovery in theme park attendance is progressing, albeit gradually,” according to the analysts report. “We believe this trend will continue as new COVID cases in Florida decline.”

SEE ALSO: Disneyland expands Marvel superhero stunt show casting call for Avengers Campus

Disney’s Florida parks are leaning heavily on local visitors as air travel to the Orlando area remains at historic low levels.

In-state visitors make up 50% of the reduced capacity attendance at Disney World parks compared to the typical 20% level during pre-pandemic times, according to the report.

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