Lionsgate Stock Soaring
With "Hunger Games" and Charlie Sheen arriving, analysts have been boosting targets since the acquisition of "Twilight" home Summit in January.
Bella Swan, Katniss Everdeen and Charlie Sheen are an unlikely trio, but they're all helping the Lionsgate film and television studio hit improbable highs on Wall Street.
Lionsgate stock, which bottomed out at $5.69 in 2011, gained 56 percent between the Jan. 13 unveiling of its $412.5 million acquisition of Twilight studio Summit Entertainment and Feb. 28. At press time, the company was trading at $13.44, with a value of more than $1.9 billion.
Analysts love the combination of studios behind the hottest youth movie series (the four Twilight pics have grossed $2.5 billion worldwide, with a final film due in November) and The Hunger Games, which could launch another franchise March 23. (Prerelease ticket sales on Fandango are outpacing those for Twilight.) Throw in anticipation about Sheen's June return to TV in FX's Anger Management, produced by Lionsgate and distributed by its Debmar-Mercury arm, and observers have increased stock price targets.
Miller Tabak analyst David Joyce upped his Lionsgate rating from "neutral" to "buy," and Matthew Harrigan of Wunderlich Securities noted, "Lionsgate is already cross-marketing its Hunger Games ticket-giveaway program to 28 million Twilight Facebook friends."
Cameras won't start rolling on Anger Management until mid-March, but the show already has sold to Germany, Latin America and Canada, with more territory deals expected. Buyers are signing for 100 episodes, assuming the first 10 hit a ratings threshold during the comedy's summer run.
"It's being sold at the high end, and in certain cases at the highest end for a U.S. sitcom," says a source, who adds Lionsgate could generate about $1 million an episode from international sales, fees comparable to Seinfeld and Sheen's Two and a Half Men.
"Charlie is one of the proven quantities in international television," says Ira Bernstein, co-president of Debmar-Mercury. Many international buyers want the series because Men performs very well for them or a rival has Men and they don't want to lose out again.
Of course, if Anger Management or Hunger Games flops, Lionsgate stock could return to the 2011 doldrums, during which the company made just $32 million in profit. But CEO Jon Feltheimer also could see digital benefits ahead for Epix, the movie channel in which it is a partner and which has a Netflix deal expiring soon.
"We see the accelerated likelihood that Netflix re-antes its exclusivity with Epix," notes analyst Benjamin Mogil, "which could mean another $30 million to $40 million per year in revenue to the channel."
LIONSGATE STOCK PRICES
- Jan. 13, as Summit deal is announced: $8.71
- Feb. 28: $13.44 (+54%)