Red-Hot Disney Stock Slapped With Rare Downgrade

The bear note comes amid valuation concerns

The shares of Walt Disney Co (NYSE:DIS) are down 1.2% at $139.94, after the Dow stock was hit with a rare bear note. Specifically, Imperial Capital downgraded Disney to "in line" from "outperform," saying the equity is now at "record multiples" following its recent rise up the charts. The brokerage firm maintained its price target of $147 -- modest upside to last Friday's close. According to CNBC, this marks the first Disney stock downgrade since last June.

Heading into today's trading, Walt Disney stock was boasting a 29% year-to-date lead, and topped out at a record high of $142.95 on Friday. As such, the equity's 14-day Relative Strength Index (RSI) settled last week squarely at 70, indicating DIS shares were oversold -- and could be in store for a near-term pullback.

Given the stock's longer-term technical strength, it's no surprise to see sentiment tilted toward the bullish side -- both among analysts and the options crowd. Options bulls are circling today, too, with around 36,000 calls traded so far -- four times what's typically seen and four times the number of puts on the tape. Speculators may be buying to open the June 140 and 142 calls to bet on a quick bounce for DIS by front-month options expiration at the close this Friday, June 21.

Elsewhere on Wall Street, short sellers have been calling it a day, with short interest down 7.2% in the two most recent reporting periods to 17.47 million shares. This accounts for just 1.1% of the equity's float, or 1.2 times the average daily pace of trading.