Lionsgate Stock Upgraded on Greater Theatrical Earnings Visibility

8:14 AM PST 06/01/2012 by Etan Vlessing

RBC Capital Markets analysts applauded the Canadian producer of "The Hunger Games" and "Mad Men" for growing and monetizing its TV business across multiple platforms.

TORONTO – Lionsgate got an upgrade Friday from RBC Capital Markets, on greater theatrical “earnings visibility” and accelerating TV production.

In the wake of its fourth quarter loss, RBC analysts David Bank and Nicolas Caplan pushed stock in the indie studio to an outperform rating, from sector perform, and hiked their share price target from $12.50 to $15.00.

The analysts said Lionsgate is a “structurally transformed company with solid visibility into earnings” after moving from securing one-off theatrical hits to creating and exploiting proven teen tentpoles like The Hunger Games and Twilight franchises.

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“Further, its growing TV production business should allow it to benefit from increasing opportunities to monetize TV content across traditional and digital distribution platforms,” they wrote in their investor note.

Shares in Lionsgate were down by 29 cents, or 2.2 percent, to $13.03 during morning trading Friday, as short sellers continue to pile into the indie studio stock after it posted a surprise fourth quarter loss Wednesday on higher-than-expected writedowns.

At the same time, Lionsgate shares earlier surged to the $16.00 range ahead of the March release of The Hunger Games.

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