Lionsgate Shares Drop 10 Percent Despite 'Hunger Games: Catching Fire' Release
In classic sell-the-news fashion, Lionsgate's shares dropped 10 percent on Monday to their lowest point in four months, despite the enormous success of The Hunger Games: Catching Fire.
The film opened with $161.1 million domestically, setting a record for a November opening. The sequel also surpassed the original, which opened in March 2012 at $152 million domestically, and it set a record for the best opening in Lionsgate's history.
Worldwide, Catching Fire earned $307.7 million and analysts were projecting it could be the first $1 billion movie for Lionsgate. The first Hunger Games earned $691.2 million and The Twilight Saga: Breaking Dawn Part 2, which is Lionsgate's biggest movie thus far, earned $830 million worldwide.
Nevertheless, shares of Lionsgate fell $3.53 on Monday to $30.23. The stock, however, has been on such a tear lately -- partly in anticipation of Catching Fire -- that it remains 84 percent higher on the year.
Based on Catching Fire's strong weekend, Cowen & Co. analyst Doug Creutz on Monday increased his earnings-per-share estimates over the next two fiscal years for Lionsgate. He now expects the company to earn $1.20 a share in fiscal 2014, up a penny from his previous estimate, and $1.81 in fiscal 2015, up six cents over his last projection.
He also didn't seem surprised that the stock didn't bounce higher on Monday.
"We expect investors to now shift their focus to Divergent, opening March 21, 2014," he wrote. "We believe this will be an opportunity for Lionsgate to prove that it is able to come up with a pipeline of strong franchises vs. being dependent on just a few."
Creutz estimates that Divergent will earn $130 million domestically, enough to make it "a franchise starter."