Nomura Analysts Calls Disney COO Departure 'Surprising And Unexpected'

Walt Disney Co DIS's departure announcement of Tom Staggs, the company's Chief Operating Officer (and previously considered "heir apparent" to the CEO), is "certainly surprising and unexpected," according to Nomura.

Staggs will be stepping down from his position as of May 6, 2016, according to the notice. Shares of Walt Disney were under heavy pressure Monday afternoon, down more than 1.5 percent to around $97.04 in the after-hours session. The shares were down about 2 percent in the Tuesday's pre-market hours at $96.80.

Related Link: Disney COO Thomas Staggs To Step Down; Shares Fall

"This is certainly surprising and unexpected, particularly given the care that Disney and its Board had previously taken towards the succession process, seemingly to avoid precisely this sort of disruption. The struggle investors are likely to have is in the "why; it is as of yet unclear as to what skill or area of expertise Mr. Staggs was lacking," analyst Anthony DiClemente wrote in a note.

A press release from Disney stated, "Mr. Staggs' planned departure caps a distinguished 26-year career that began in Strategic Planning. He rose through the ranks to be named Chief Financial Officer, earning praise from Wall Street for his financial and communications skills. Mr. Staggs also led Disney's Parks & Resorts through an era of historic growth."

Nomura, Others React

DiClemente said, "The investment community and the press are likely to speculate: may be the Board feels that an external candidate could bring greater diversity of background to the office, may be the Board thinks Mr. Iger should stay on longer as CEO, may be Mr. Staggs has other more expeditious offers, or may be Tom just decided, for one reason or another, that he really didn't want the CEO job after all; investors haven't heard a clear answer to the 'why' from Disney."

According to a Tweet from CNBC, Staggs was not given assurance by the Disney board he would be CEO Bob Iger's successor. Staggs and the board subsequently mutually agreed he should leave.

The analyst continued, "We do know that while this news is clearly a set back to the company's efforts to find an adequate successor to Bob Iger (if this is even possible), that Mr. Iger does not plan to step down from his role as CEO until at least June 2018, leaving 2¼ years for the Disney Board to select an internal or external candidate, ample time to be sure."

DiClemente has a Buy rating and $110 price target on Disney shares, which have dropped 7 percent this year and were trading between $86.25 and $122.08 during the past 52 weeks.