Strong earnings report keeps company stock on the rise
Wall Street has continued to swoon over Lionsgate as a half-dozen analysts have boosted their price targets for the studio in the wake of a strong earnings report.
The analyst upgrades have kept Lionsgate shares on an upward path. The stock has posted a dozen all-time highs this year and closed Friday up 1 cent at $20.41 — more than double the $8.60 a share price when Lionsgate bought Summit a year ago.
Monday’s earnings report easily topped Wall Street estimates thanks to the final “Twilight” film with earnings of $37.8 million, or 28 cents a share, on revenues of $743.6 million and EBITDA of $87.2 million for its third quarter ended Dec. 31. Alexia Quadrani of JP Morgan reiterated the overweight rating the next day and bumped the price target up from $20 to $22.
“Shares have bounced back nicely from lows following the release of ‘Hunger Games’, and we believe more upside is likely, especially on higher estimates as we approach numerous positive catalysts that we believe will demonstrate the breadth of LGF’s TV and film slate and the company’s improved financial position.”
Jim Goss of Barrington Research upgraded from $21 to $24 after a recent boost from $19 to $21; David Bank of RBC Capital pushed his target from $18 to $21; James Marsh of Piper Jaffray went from $22 to $25; Alan Gould of Evercore moved from $20 to $24 and David Miller, BRiley Caris went from $21 to $23.
Analysts have expressed confidence that Lionsgate will be able to mirror the success of launching more young-adult franchises and cited efforts to leverage its content into digital media initiatives; strengthening Lionsgate’s capital structure, including the recent completion of a new five-year, $800 million revolving credit facility.
Lionsgate has also maintained continuity in management team with several recent deals announced for re-upping vice chairman Michael Burns, Wayne Levin as general counsel and chief strategic, and Jason Constantine as president of acquisitions and co-productions for its motion picture group.