Pixar’s picking up

Stock looks swell in wake of 'Nemo' success

Things have been going swimmingly for Pixar shares.

The stock posted a hefty gain for a second straight sesh Tuesday following a recent analyst’s upgrade, even as execs from the animation studio prepare to resume talks with Disney for an extension of the toon partners’ co-production agreement. The talks could lead to rosier movie profits for Pixar, whose latest pic has proved to be the long-distance success story of the summer.

Leggy fish tale “Finding Nemo” was released May 30 but is still playing so strongly that it outgrossed a rival tooner released by DreamWorks last weekend. With $275 million in its domestic coffers to date, “Nemo” could overtake Disney classic “The Lion King” ($328.5 million) as the top-performing toon.

Meanwhile, some recent numbers on Wall Street are prompting smiles from Pixar investors.

Pixar shares rose $2.92, or 4.6%, to close at $66.32 on Tuesday. That followed a 3% climb a day earlier, with the stock now sitting at a 52-week high after gaining an impressive 25% since Dec. 31.

Rating up to ‘hold’

Standard & Poor’s cited the prospect of big profits from “Nemo” in raising the firm’s rating on the stock Monday from “avoid” to “hold.” Hardly a breathless endorsement, but the ratings change does seem to reflect market enthusiasm for the stock at present.

Still, some warn that what goes up soon could crash.

“The problem is that there’s still no deal with Disney, and I don’t think there will be one for a couple of years,” cautioned Dennis McAlpine of market-research firm McAlpine Associates. “‘Nemo’ means that Pixar will get more earnings, but it still doesn’t give them a deal with Disney.”

In fact, McAlpine — who maintains a “sell” rating on the stock — said “Nemo’s” success could make it even harder for the partners to work out a deal.

Differing views

Pixar wants to knock Mouse’s role down to a mere distrib-for-hire, while Disney continues to insist on a broader relationship. Conglom splits box office evenly with Pixar on partners’ co-prods while also enjoying a 15% distribution fee.

“Nemo” is the fifth of a series of co-prods on which Pixar and Disney have partnered. Mouse got even a sweeter B.O. split on the deal’s first pic, “Toy Story,” but the relationship was altered in 1997 to provide for an even split on “A Bug’s Life” and subsequent pics.

The current agreement runs through two more releases — “The Incredibles,” set for November 2004, and “Cars,” an unslotted 2005 release. But terms allowed Pixar recently to begin shopping early for a potential new distribution partner.

There’s been no indication that Pixar’s talks with other studios have advanced beyond preliminary meet-and-greets, however. And a well-placed source indicated execs from Disney and Pixar have agreed to meet in about two weeks to continue their negotiations, which top brass from both companies recently described as amicable.

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