'Hunger Games' Boosts Lionsgate Stock as 'Twilight' Fans Line Up for Final Film
Shares jump 14 percent after higher earnings blow past expectations; analyst calls the company's pipeline "tantamount to a new major studio."
Shares of Lionsgate surged 14 percent on Friday, a day after the company reported quarterly earnings that blew past Wall Street’s estimates because of strong home-entertainment revenue generated by The Hunger Games.
Lionsgate earned 53 cents per share in the third quarter, a whopping 44 cents more than analysts had predicted. Revenue doubled to $707 million while analysts expected just $623 million.
The stock surge coincided with news that fans of the studio’s other big franchise, the Twilight movies, were lining up at L.A. Live four days ahead of the premiere of the final installment, The Twilight Saga: Breaking Dawn -- Part 2.
Fans who are camping out for Monday’s premiere are hoping to catch a glimpse of Kristen Stewart, Robert Pattinson and Taylor Lautner as they walk the “black carpet,” but they’ll have to wait until Thursday night or later to actually see the movie.
While Hunger Games and Twilight were the catalysts most often cited for Friday’s advance -- the stock rose $2.08 to $14.25 -- Lionsgate has been performing well on a number of levels lately, with films including The Possession, The Expendables 2, Step Up Revolution and Madea’s Witness Protection Program, as well the TV series Mad Men contributing to the bottom line.
On Friday, analyst Gregory Brown of Wunderlich Securities reiterated his “buy” recommendation on the stock and $19 price target and raved about the company’s prospects.
“The indie is now emphasizing somewhat higher-budget movies for both Lionsgate and Summit product, with a pipeline that is tantamount to a new major studio as it looks at new franchises such as Chaos Walking and Ender’s Game.”
Brown noted that advance sales for the final Twilight movie are running ahead of The Hunger Games and Warner Bros.’ final Harry Potter movie.
“There is a decent likelihood that global grosses for the [supposed $135 million film] could exceed that for Breaking Dawn -- Part 1, which grossed $281.3 million stateside and $423.8 million internationally,” the analyst wrote.