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Disney stock downgraded by Guggenheim, Sherwin-Williams falls on guidance, casino stocks pop

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Yahoo Finance's Emily McCormick and Adam Shapiro discuss about Disney's lagging market performance, Sherwin-Williams' slide due to raw material and labor shortages, and Wynn resorts' return to growth.

Video Transcript

EMILY MCCORMICK: Let's take a look at shares of Disney. Now, it's one of the laggards in the Dow Jones Industrial Average today after a downgrade from the Wall Street bank Guggenheim. Now, the firm cut its recommendation on shares of Disney to neutral from buy and also slashed its 12-month price target to $165 from $205 per share. Those shares are currently trading around $151 apiece.

Now, this downgrade is primarily due to concerns over the rate of earnings growth for Disney. And specifically, Guggenheim analysts said in their note earlier today that the downgrade accounts for, quote, "our updated view of the pace of profit growth at the company's direct-to-consumer and parks businesses, which is now below consensus through fiscal 2024." Disney is expected to next report quarterly earnings results on February 9, so we'll get an update from the company again then.

But for now, consensus analysts are looking for Disney's adjusted earnings per share to jump 90% over last year to reach $0.61 a share for its most recent quarter. Now, that jump would come, though, we should note, as Disney laps the period last year when most of its theme parks were still closed or at limited capacity during the pandemic. And shares of Disney have fallen by about 18% over the past six months.

Then there are shares of Sherwin-Williams Company. Now, the household paint and supplies company is also seeing its shares coming under pressure, and that is after it announced preliminary quarterly results that missed estimates, mostly due to both labor and raw material shortages. Now, Sherwin-Williams said it expects adjusted earnings will be about $1.35 a share for the fourth quarter compared to the $1.69 that consensus on Wall Street was looking for.

Now, CEO John Morikis said in this morning's earnings statement, quote, "We are disappointed in our weaker-than-expected earnings results. We faced meaningful labor challenges in the Americas group in December related to the COVID Omicron variant as our workforce, including store managers, field sales reps, and drivers experienced reduced staff availability and store hours in some locations." Now, Sherwin-Williams is expected to report its full fourth-quarter results on January 27, but for now, that stock is down nearly 3%, Adam.

ADAM SHAPIRO: Emily, I love when I get to pick Ford as one of my stock. I always think of my grandmother's '73 green Ford Gran Torino. This stock was trading down slightly after the opening bell, but right now it's actually trading up just a bit.

Brian Sozzi wrote about this today-- story's still on the YahooFinance.com page-- and the potential for the share price for this stock to fall. Here's what's going on. Their market cap now $100 billion, but Sozzi points to Morgan Stanley analyst Adam Jonas, who's well known in the field, saying that Ford shares got ahead of themselves, and he's lowering his rating on the Ford shares to the equivalent of sell, now underweight. Thinks that the stock price, which is around $25, could fall to $12.

So he said, quote, "The stock market's attraction to the Ford EV story continues to take us by surprise," but still thinks the stock and the investors are getting ahead of themselves. That's at least what Morgan Stanley's Adam Jonas is saying.

Then you got Wynn. Who doesn't love to go gaming? Have you ever been to the Wynn Resort in Las Vegas? They got great buffet. Anyway, shares were up 7%. They've stayed there roughly most of the day, up about 8% now. This is news out of Macau. The government there has clarified their position on the gambling law changes that are coming down the pike.

Bottom line, those who have casino licenses are going to probably get to keep them and, in fact, will be able to renew them. So there was concern that the lengths of the license would be halved. But the bottom line for investors is that it looks as if Wynn Macau will be able to extend its license past June and for several years, and investors like that.