Analyst: Stock fully valued on eve of 'Hunger Games' bow
Wall Street has taken a breather from its bullishness over “The Hunger Games” after Lionsgate’s stock hit three consecutive all-time highs.
The stock closed down 7.2% Thursday, off $1.13 to $14.55 a share on heavy volume of 11.6 million shares. The issue had gained 8%, 7% and 4% in the three previous trading days.
It’s not uncommon for showbiz shares to run up ahead of big film releases, but if stock gets too far ahead of itself Wall Street eventually puts the brakes on.
In a report Thursday morning, Evercore Partners analyst Alan Gould called the stock fully valued and lowered his rating to “equal weight” with a price target of $15.
“Management has fundamentally and financially transformed Lionsgate with the acquisition of Summit and ‘The Hunger Games’ franchise. But with the stock up 88% year-to-date, we believe the majority of that change is now reflected in the price,” Gould said.
“?’The Hunger Games’ is anticipated to gross $137 million in its opening weekend and $350 million domestically (overall). Given the record-breaking pre-sales, additional showtimes being added, strong reviews, quality of the movie and lack of competition for a number of weeks, we believe these numbers are imminently achievable.”
Gould also said Evercore has raised its valuation on the four-film “Hunger Games” franchise to $1.2 billion-$1.4 billion, assuming a $300 million-$350 million domestic box office for the first film.
Even with Thursday’s decline, the stock has more than doubled in value since late August, when Lionsgate reached a settlement with Carl Icahn to cash out his 33% position. It’s also up 70% since Lions-gate acquired Summit Entertainment on Jan. 13 for $412.5 million.