Published - December 20, 2022 @ 11:26 AM (EET)

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Walt Disney shares fell 4.8% on Monday following a disappointing opening box office weekend for James Cameron's "Avatar: The Way of Water."

While the latest release posted impressive results, clearing $134 million in domestic markets, the numbers fell short of analysts' expectations of $175 million, extending a lengthy selloff that took the stock to a more than two-year low.

In its first two days of domestic release, the film, one of the most expensive movies in Hollywood history, made $53 million while raking in $300.5 million internationally.

In China, the blockbuster earned $57.1 million as lingering worries over the coronavirus tempered ticket sales.

WHY IT MATTERS

Since the pandemic's start, when movie theaters and theme parks haven't run for months, Disney (NYSE:DIS) has been facing challenges.  More recently, CEO Bob Chapek and Disney have also faced scrutiny, particularly over the company's performance.

Yet, despite some concerns, box office analysts believe "Avatar: The Way of Water" will retain momentum over the holidays.

The original "Avatar" film, released in 2009, made just $77 million during its first weekend but soon became the highest-grossing movie ever. 

During its time in theaters, the film grossed $760 million in the US and Canada and more than $2 billion internationally.

Truist Securities, which has a buy rating on the stock, wrote,

"It is still early in the holiday season, with limited competition and generally favorable reviews."

Chief media analyst Shawn Robbins at BoxOffice.com echoed the sentiment and said,

"Although the film is opening on the low end of expectations, it's important to again emphasize the long-term outlook."

Meanwhile, some theater operators claimed an Avatar-related victory as the film's popularity reigned in customers over the weekend.  High-end theater, IMAX (NYSE:IMAX), said the sequel led to the second-biggest opening weekend for a movie in its history.

Other firms further suggested that ticket pre-sales indicated audiences are waiting to see the film in IMAX theaters.

PRICE TARGET: Disney remains a Strong Buy among analysts based on 30 ratings covered by Refinitiv (24 Buys and 6 Holds), while the average price target of $125.93 implies an upside potential of 46.75%.

The stock has a 52-week high of $160.32 and a 52-week low of $86.28

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