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Analyst: Lionsgate Stock Still Has Plenty of Catalysts Post-'Hunger Games'

The Hunger Games
Lionsgate

The studio's shares have dropped 25 percent from a recent high to levels seen before the blockbuster's opening, with one Wall Street observer saying that discounts the value of the franchise and the recent Summit acquisition.

Lionsgate's stock has come off the highs it set around the opening of blockbuster The Hunger Games, but one analyst said Wednesday said there are enough catalysts for investors to buy it.

The stock closed at $12.14 on Tuesday, 25 percent below its all-time high of $16.19 set March 21.

"While Lionsgate stock has returned to pre-Hunger Games levels, we believe that there are a number of near-term catalysts, which should provide support going forward," Stifel, Nicolaus analyst Ben Mogil argued in a report Wednesday titled "The Movie Is Playing, Why Isn't the Stock?" "We see catalysts ranging from the home entertainment performance of Hunger Games to the new Charlie Sheen show to anticipation for the last Twilight installment."

Importantly, he suggested that at the current stock market valuation, investors are "largely discounting the value of the Summit acquisition, while also applying a discounted value to the Hunger Games franchise." He also said about the first film in the franchise that "it has become increasingly clear that, despite the stock's response, Hunger Games continues to live up to expectations."

Amid continued discussion over the recent news that Hunger Games director Gary Ross will not handle the sequel, Catching Fire, Mogil said it is "not material in our view."

Given all that, he retained his "buy" rating on Lionsgate shares and set a new $17 target price.

Earlier in the week, Miller Tabak analyst David Joyce also said that "the profit-taking has possibly been overdone, and Lionsgate appears to be a good long-term buy at these levels." He also has a "buy" rating and $17 target price on Lionsgate's stock.

Email: Georg.Szalai@thr.com

Twitter: @georgszalai