'Hunger Games' Hype Gives Way as Lionsgate Stock Drops

8:13 AM PST 03/22/2012 by Etan Vlessing
Joe Pugliese

Shares in the indie studio started coming back down to earth Thursday, falling 6 percent to $14.72, in mid-morning trading on the New York Stock Exchange.

TORONTO – Stock in Lionsgate on Thursday fell from dizzying heights reached Wednesday, ahead of The Hunger Games debuting on theatrical release this weekend.

And at least two entertainment analysts believe the recent investor feast on Lionsgate shares is ending.

Alan Gould and Tracy Zhang, media analysts with Evercore Partners, in an investor note Thursday said Lionsgate’s Summit Entertainment acquisition and stellar box office from The Hunger Games are largely baked into the current stock price, indicating resistance to any further share price rises.

The Evercore duo are raising their share price target for Lionsgate to $15.00 as they down-grade the indie studio’s stock to equal-weight.

And Gould and Zhang may just be prescient.

The hype around The Hunger Games opening this weekend has shares in Lionsgate up 88% in the last 12 months, since the end of Carl Icahn’s unsuccessful bid to take control of the indie studio and the Summit acquisition.

That said, shares in Lionsgate fell sharply on the New York Stock Exchange Thursday in early morning trading, off 96 cents, or 6 percent, to $14.72.

That fall was preceded Wednesday by heavy buyer-driven activity pushing stock in Lionsgate to $15.68, just off a 52-week high of $16.19.

The Evercore analysts argued the Summit acquisition and The Hunger Games franchise was “now reflected in the price.”

Gould and Zhang are still bullish about The Hunger Games, predicting an opening weekend box office of $137 million and a $350 million domestic gross.

“Given the record-breaking pre-sales, additional show times being added, strong reviews, quality of the movie, and lack of competition for a number of weeks, we believe these numbers are imminently achievable,” they wrote in their investors note.

Gould and Zhang raised their valuation on The Hunger Games franchise to between $1.2 billion and $1.4 billion.

comments powered by Disqus