DreamWorks Animation Stock Takes Another Hit With ‘Peabody & Sherman’

Mr Peabody and Sherman

Toon company's price target plummets to $21 per share

Most of Wall Street was not impressed with DreamWorks Animation’s second recent lackluster release: “Mr. Peabody & Sherman,” which bowed to $32.2 million domestically, caused the toon shop’s price target to plummet from $35 to $21 per share, according to Cowen and Co. analyst Doug Creutz.

DWA stock closed Monday at $29.05 per share, down 1.39%, following the toon’s disappointing Stateside debut.

While the Cowen research note included a snarky reference to the film as “just another dog,” other analysts focused more on the company’s longterm prospects, including B. Riley’s Eric Wold, who valued DWA in his report at $37 per share, up from $32. Wold added: “With our concerns around the performance of ‘Mr. Peabody & Sherman,’ for the most part, behind us, we are refocusing on the positive shift in the film slate weighting towards the studio’s core franchises over the next 18 months.”

DWA will release “How to Train Your Dragon 2” on June 13, followed by the alien-invasion toon “Home” timed for Thanksgiving weekend.

Meanwhile, Cowen’s Creutz noted: “We are lowering our estimates for (‘Peabody & Sherman’), but also for all future DWA original films, based on the fact that the company has been piling up an increasingly alarming film body count over the past few years.”

“Peabody & Sherman,” which Fox is distributing worldwide as part of the studio’s slate distribution deal with DWA, follows “Turbo,” which cost $135 million to produce and grossed just $282 million worldwide, causing DWA to take a $13.5 million writedown during fourth-quarter 2013. Before that, DWA took an $87 million writedown on another non-franchise film, “Rise of the Guardians,” which grossed $306 million in 2012.

Global estimates for “Peabody & Sherman” range between $350 million and $400 million. The film was budgeted at $145 million, which means DWA could suffer another writedown comparable to “Rise of the Guardians.”

So far internationally, “Peabody & Sherman” has grossed a soft $65.4 million from 56 territories. The film has yet to launch in 20 markets including Australia, China, Italy and South Korea.

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  1. laughsatanalysts says:

    DreamWorks stock also took a big hit when “How to Train Your Dragon” opened and analysts promptly declared it had flopped after the first weekend.

  2. cmarrou says:

    Let’s see…the average person who remembers the “Peabody and Sherman” cartoons on TV in the late 50s-early 60s must now be 60-70 years old. The prime audience for animation is kids 4-14 and their parents, who are 30-44. “Rocky and Bullwinkle” (from which P&S came) didn’t make much of an impact overseas – yet someone gave this the green light. Would that I had been a fly on the wall at those meetings.

  3. Colin Vickery says:

    Surely one of the biggest problems here is Peabody & Sherman’s $145 million budget. By comparison, The Lego Movie cost $60 million. The budgets of many recent animated movies are ridiculously high.

  4. onmedea says:

    I don’t think DWA can hang on. They must be thinking about an exit strategy – even with all the sequels coming up.
    http://mankabros.com/blogs/onmedea/2011/03/31/dreamworks-animation-whats-the-point/

  5. Logan Huggins says:

    I’m really having a hard time understanding this… It seems to me that if a film makes anywhere between 350 and 400 million and only cost $145 million; that should put it in the green, right? I know that there are other, non-budget, costs that go into the movie (such as marketing, etc) but are those costs that much to evaporate a 400 million gross?

    I’m not being sarcastic, or snarky or anything. I just want to be able to wrap my head around this….

    • jedi77 says:

      North American Box office is usually regarded as split 50/50, though there are all sorts of other arrangements that can change that dynamic.

      But when it comes to foreign Box Office, the studio only gets apx. 10-40% of the grosses.
      Check this out on the chinese numbers for instance – only 25% goes to the studios, and before 2012 that number was 13 to 17%:
      http://www.hollywoodreporter.com/news/china-box-office-standoff-studios-597954

      “The studios’ cut used to be between 13 and 17 percent, but a landmark deal in February 2012 brokered during a visit to the U.S. by then-Vice President Xi Jinping — who became the Chinese leader in November — upped the take to 25 percent.”

    • Patrick Juvet says:

      Because a chunk of that money stays with the theatre owners as their split of the ticket price.

    • Why says:

      The studio received approx. half the boxoffice gross worldwide (varies country by country).

      A $400 million gross will return in the neighborhood of $200 million back to the distributor (DWA).

      Global advertising and distribution costs for a wide release can cost the studio $100-150 million or more.

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