Disney is preparing to reopen one of its biggest cash generators – its Orlando, Florida, theme parks.
The company said Wednesday that it plans to reopen its Magic Kingdom and Animal Kingdom parks on July 11, and Epcot and Hollywood Studios a few days afterward.
Shares of Disney were down Thursday, but have rallied 23% this quarter. Bill Baruch, president of Blue Line Capital, said they may have run too far, too fast.
"Don't get caught up in just the [fear of missing out] here -- that we've rallied so much -- there's strong overhead resistance in this chart," Baruch said Thursday on CNBC's "Trading Nation." "If you look at this island created from when Disney+ became reality, that's now resistance -- you have the 200-day moving average overhead at about $128."
Disney traded at nearly $119 on Thursday afternoon. It would need to rally another 8% to reach that level.
"Do not chase this price action. There's very little value up here, and overall the great uncertainties with the parks and experiences -- they're the main part of the income. And so, until we get those rolling, there's still a lot of doubt out there, a lot of uncertainties lingering. I would be a buyer closer to $110," said Baruch.
Disney would need to drop 7% to reach Baruch's buy level at $110.
Mark Tepper, president of Strategic Wealth Partners, is also wary of Disney's rise.
"The risk-reward setup does not look very promising right here," Tepper said during the same segment. "All the easy money's already been made so we're in wait-and-see mode on Disney right now. And, you know, quite frankly, you've seen a lot of these economy-reopening stocks surge over the last few days without any regard whatsoever for the underlying fundamentals."
Even with parks reopening, Tepper said the reduced capacity will hurt revenue in one of its largest segments. Disney+ is also not the boon investors are hoping for, he said.
"Disney+ has exceeded expectations, but it makes zero money for the company. And then you take a look at their goldmines which are parks and studios … and that makes up over 50% of their revenue and those are going to be under pressure for the foreseeable future," said Tepper. "There's definitely a lot of temporary headwinds for this that could last longer than a lot of people are expecting."
