LOS ANGELES (MarketWatch) -- Shares of Walt Disney Co. stumbled Monday after the company's new film, "Cars," made a healthy debut over the weekend but didn't live up to expectations of previous releases through its Pixar unit.
Opening weekend receipts for the film, which uses computer-generated imagery, ended at $60.1 million, well below the $70 million opening for other hits "Finding Nemo" and "The Incredibles." That's also down from the $62.8 million originally estimated in weekend receipts when preliminary figures were released Sunday.
Banc of America analyst Doug Shapiro said the opening weekend was "hardly a failure" for Disney, a Dow component, though it does have negative implications.
"Based on the recent performance of CGI films and its mixed reviews, the film could struggle to gross $230 million domestically," Shapiro wrote in a note to clients. "More significant, it also raises questions about the rationale for the Pixar deal and, as a result, raises a central question about the Disney bull case."
Made on an estimated $70 million budget, "Cars" appears to be well on its way toward profitability. The film is the seventh collaboration between the creative forces at Pixar and the distribution muscle of Disney, though it is the first film released since the two entities merged. The $7.4 billion deal was announced in January and completed in May.
"Cars" would have been the last film the two companies worked on had they not merged, as Pixar had been looking for another distributor to market its films after it had a falling out with previous Disney management. That all changed with Robert Iger took over as chief executive from longtime Disney chief Michael Eisner in 2005.
The "Cars" opening is still better than Dreamworks Animation's film "Over the Hedge," which opened recently to $38.5 million in weekend receipts, and almost in line with Fox's sequel "Ice Age: The Meltdown," with an opening weekend of $68 million, Lehman Brothers analyst Vijay Jayant wrote in a note to clients. But he said Disney shares could still be weaker in Monday trading because of the "Cars" opening.
Disney's stock drop comes on the heels of a rating cut by Citigroup, which in a note dated late Friday had cut the company's shares to hold from buy.
Citigroup analyst Jason Bazinet said Disney shares are less attractive at current levels following a strong run and could have trouble achieving consensus earnings-per-share estimates for fiscal 2007. Bazinet also raised his price target on Disney to $32 a share from $30, citing the acquisition of Pixar, as well as more robust syndication revenue and Internet advertising growth.
Russ Britt is the Los Angeles bureau chief for MarketWatch.
Angela Moore is a MarketWatch editor based in New York.
Opening weekend receipts for the film, which uses computer-generated imagery, ended at $60.1 million, well below the $70 million opening for other hits "Finding Nemo" and "The Incredibles." That's also down from the $62.8 million originally estimated in weekend receipts when preliminary figures were released Sunday.
Banc of America analyst Doug Shapiro said the opening weekend was "hardly a failure" for Disney, a Dow component, though it does have negative implications.
"Based on the recent performance of CGI films and its mixed reviews, the film could struggle to gross $230 million domestically," Shapiro wrote in a note to clients. "More significant, it also raises questions about the rationale for the Pixar deal and, as a result, raises a central question about the Disney bull case."
Made on an estimated $70 million budget, "Cars" appears to be well on its way toward profitability. The film is the seventh collaboration between the creative forces at Pixar and the distribution muscle of Disney, though it is the first film released since the two entities merged. The $7.4 billion deal was announced in January and completed in May.
"Cars" would have been the last film the two companies worked on had they not merged, as Pixar had been looking for another distributor to market its films after it had a falling out with previous Disney management. That all changed with Robert Iger took over as chief executive from longtime Disney chief Michael Eisner in 2005.
The "Cars" opening is still better than Dreamworks Animation's film "Over the Hedge," which opened recently to $38.5 million in weekend receipts, and almost in line with Fox's sequel "Ice Age: The Meltdown," with an opening weekend of $68 million, Lehman Brothers analyst Vijay Jayant wrote in a note to clients. But he said Disney shares could still be weaker in Monday trading because of the "Cars" opening.
Disney's stock drop comes on the heels of a rating cut by Citigroup, which in a note dated late Friday had cut the company's shares to hold from buy.
Citigroup analyst Jason Bazinet said Disney shares are less attractive at current levels following a strong run and could have trouble achieving consensus earnings-per-share estimates for fiscal 2007. Bazinet also raised his price target on Disney to $32 a share from $30, citing the acquisition of Pixar, as well as more robust syndication revenue and Internet advertising growth.
Russ Britt is the Los Angeles bureau chief for MarketWatch.
Angela Moore is a MarketWatch editor based in New York.