Here's what every major Wall Street analyst is saying about Disney's surprising CEO switch

Published Wed, Feb 26 20207:35 AM ESTUpdated Wed, Feb 26 202010:06 AM EST

(This story is for CNBC PRO subscribers only.) Wall Street analysts were shocked after Disney announced on Tuesday that its long-time CEO Robert Iger would step down and become executive chairman effective immediately. The media giant said chairman of Disney parks, experiences and products, Bob Chapek will take over. While analysts urged investors to remain calm, many questioned the timing amid coronavirus outbreak, the launch of Disney+, and integration of Fox assets among other things. Shares of the company were down 1.16% in early trading. Here's what Wall Street analysts are saying about Disney's new CEO and what to do with the stock: "There is never a great time for succession announcements, but this one is likely to cause particular consternation with investors," Wells Fargo analyst Steven Cahall said. The firm said it still liked the stock but needed to take a wait and see approach. "Chapek's challenges are really no different than what Iger faced, but in the short term we expect investors to be worried until the earnings outlook is made clear. " The feeling was largely the same at Citi where the firm noted that shareholders may find the abrupt switch hard to accept. "Mr. Iger was highly regarded by investors. Indeed, given Mr. Iger's track record, we suspect investors will have a difficult time believing any successor will be able to match Mr. Iger's results," Citi analyst Jason Bazinet said. "As such, investors may see today's announcement as a potential harbinger of tougher times ahead," he said. But Needham may have sounded the biggest warning of all saying Iger's departure from the CEO role could be more ominous than many realize. "This is negative for DIS as DIS's EPS weakness is riskier without Iger's value-creating track record," analyst Laura Martin said. The firm also said that it was curious that Iger would shift his attention to other company assets while still relinquishing the top spot. "The fact that Bob Iger believes it's a full time job to sort out the content assets over the next 2 years implies it's a bigger mess over at the FOXA content assets than we thought," she said. While JPMorgan acknowledged the timing was surprising, the firm said it had confidence in the company's decision. " Chapek is also well known by Wall Street with a big presence over the years at many investor events," the analyst said. "We continue to view Disney as one of the most well positioned media companies to evolve successfully to a DTC model and see any weakness as a buying opportunity and reiterate our Overweight rating." Bernstein- Market perform rating "Mr. Iger is one of the most beloved and respected CEOs, not just in the media space, but across all public companies. One of our favorite questions to ask investors over the past few years has been: 'can you name a legitimate candidate for Disney CEO who the market would perceive as an upgrade to Mr. Iger?' The obvious and unanimous answer being: no. This is not a condemnation of Mr. Chapek. It's the reflection of the almost impossible task of being asked to fill the shoes of such a highly respected Chief Executive, during a time of such profound change and challenges facing the company." Rosenblatt- Buy rating "Over the years, Bob Iger had been adamant that he would leave Disney at the end of his contract (December '21). While departing 22 months ahead of his contract expiring feels sudden to us, overall we believe the timing for the role change makes sense. The Coronavirus is increasingly spreading outside of China which, if continues, would likely demand greater allocation of time from the CEO of Disney. ... The context of the state of Disney's content is important to remember. This is a significant time for Disney in their content endeavors with Disney+ launching, completing a Star Wars trilogy, the Iron Man saga in the MCU ending and the ability to restart franchises acquired from Fox. " Goldman Sachs- Buy rating "The timing of this announcement is surprising, in our opinion. Our original expectation was that DIS would announce a CEO successor at the end of calendar 2020, roughly one year before Mr. Iger's retirement. With respect to the timing, Mr. Iger said on the conference call that he believes his remaining time at the company is best spent on creative endeavors, given the company's push into direct-to-consumer and its larger distribution footprint following the 21CF acquisition. Mr. Iger thinks continuing as CEO, with day-to-day operating responsibility, would not leave enough time to focus on the company's creative efforts." Citi- Buy rating "While Mr. Iger had been expected to step down as CEO by the end of his contract in 2021, today's announcement came sooner than expected. As such, we suspect investors will be surprised by today's news. ... As such, Mr. Iger was highly regarded by investors. Indeed, given Mr. Iger's track record, we suspect investors will have a difficult time believing any successor will be able to match Mr. Iger's results. With Disney potentially facing a handful of headwinds –including the potential impact of COVID-19 and an economic expansion that is long in the tooth – investors may see the timing as a way for Mr. Iger to step down on a high note (whether the timing was impacted by exogenous factors or not). As such, investors may see today's announcement as a potential harbinger of tougher times ahead." Bank of America- Buy rating "Although today's announcement comes significantly earlier than expected for an irreplaceable leader while introducing a modest level of uncertainty given Mr. Chapek's lack of direct experience engaging the investment community and managing Media Networks and DTC and International media assets, we believe Mr. Chapek brings unmatched internal leadership experience spanning a large portion of the company during three transformational decades—including stewardship of DIS' complex, consumer-facing and widely successful global theme park business. ... Looking ahead, while DIS faces new challenges with the international DTC rollout, coronavirus fallout and securing a new NFL broadcast deal, we continue to believe DIS shares are well positioned to outperform." Wells Fargo - Overweight rating "There is never a great time for succession announcements, but this one is likely to cause particular consternation with investors. We'd say Chapek is well-regarded but this decision was not really telegraphed, so there will likely be lots of questions around "why right now?" and in particular if 'core' Disney is looking incrementally risky within the C-suite. Chapek's challenges are really no different than what Iger faced, but in the short term we expect investors to be worried until the earnings outlook is made clear. " Needham- Hold rating "This is negative for DIS (our view) as DIS's EPS weakness is riskier without Iger's value-creating track record. ... The fact that Bob Iger believes it's a full time job to sort out the content assets over the next 2 years implies it's a bigger mess over at the FOXA content assets than we thought. This implies near-term downward earning revisions vs consensus estimates." JPMorgan- Overweight rating "However, in typical Disney fashion, this decision suggests a thoughtful transition, giving Iger time to work with Chapek, and spend more of his efforts on what is critical behind every division of The Walt Disney Company which is its creative efforts. ... While Chapek has very big shoes to fill, we believe he is the right man for the job; this was a planned decision for some time and he will have the support of not only Iger and the Board but also strong division heads across Disney's many growing businesses. Importantly, Chapek is also well known by Wall Street with a big presence over the years at many investor events. We continue to view Disney as one of the most well positioned media companies to evolve successfully to a DTC model and see any weakness as a buying opportunity and reiterate our Overweight rating." Morgan Stanley- Overweight rating "We continue to see Disney as well positioned to build a large and profitable streaming business, and expect a return to strong adjusted EPS growth in F21. Thus far, the impact on Disney from COVID-19 has been limited to the parks in Shanghai and Hong Kong, which represent about 1% of OI per month the parks are shut. At this point, it is too early to assess the risk to the US parks, which otherwise have delivered strong and even accelerating top line trends of late."

Bob Chapek, Disney

Jeff Gritchen | MediaNews Group | Orange County Register via Getty Images

(This story is for subscribers only.)

Wall Street analysts were shocked after Disney announced on Tuesday that its long-time CEO Robert Iger would step down and become executive chairman effective immediately. The media giant said chairman of Disney parks, experiences and products, Bob Chapek will take over.

While analysts urged investors to remain calm, many questioned the timing amid coronavirus outbreak, the launch of Disney+, and integration of Fox assets among other things.

Shares of the company were down 1.16% in early trading.

Here's what Wall Street analysts are saying about Disney's new CEO and what to do with the stock: