Issue boosted by strong earnings performance
Lionsgate stock jumped to an all-time high on strong earnings with the studio touting its ability to create young adult franchises such as “Divergent,” as well as the “Red” and “Expendables” franchises.
Shares soared 2.74%, gaining 77 cents to $28.80 in trading Friday with shares touching $30.57 at one point before a late sell-off hit most issues. After the market closed Thursday, Lionsgate had reported earnings well above Wall Street forecasts, coming in at $163 million, or $1.10 per share, for its fourth quarter ended March 31.
“We’ve talked about these priorities before and many of our competitors are discussing similar themes,” he said. “However, they bear repeating because in each of these areas, we are pursuing strategies unique to Lionsgate that utilize our specific skill sets and differentiate us from our competitors. For example, of course, everyone talks about franchises but one of our areas of differentiation is our focus on young adult properties.”
Feltheimer said that owning “The Hunger Games” and “Twilight” gives the company a catalyst in launching other properties.
“These franchises have been designed from the start to harness the power of social media and other online fan bases, an area in which our track record extends back to the ‘Saw’ franchise,” he added. “We’ll mobilize our fan base and utilize our social media expertise as we launch our next young adult franchise, ‘Divergent,’ which wraps in Chicago next month with a terrific cast starring Shailene Woodley, Theo James, Ashley Judd and Kate Winslet.”
“Divergent” has been dated for release on March 21, 2014 — which Feltheimer noted is the same slot used last year for the release of “The Hunger Games.” The exec noted that sales of Roth’s first two books have topped 3 million, a figure he said compares favorably with book sales for “The Hunger Games” and “Twilight” at an equivalent point.
Feltheimer also disclosed the studio is “advanced negotiations” with Jackie Chan, Wesley Snipes, Nicolas Cage and Milla Jovovich for “The Expendables 3” and is aiming for a start of production in August. He also noted that Lionsgate has already hired “Red 2” writers Eric Hoeber and Jon Hoeber to begin work on “Red 3.”
The CEO also touted growth of the TV business, predicting that it will generate over $500 million in revenues in the current fiscal year, and in the international box office for its films.
A trio of analysts issued increases in their price targets Friday. David Miller of BRiley Caris raised his price target from $32 to $34; Ben Mogil of Stifel Nicolaus went from $29 to $31; and Drew Borst of Goldman Sachs raised his price target to $30.
“We continue to believe that LGF is set to dramatically increase its TV Production output substantially, specifically by as much as 15% in Fiscal 2015 versus Fiscal 2014,” Miller said.