Marvel upgrades guidance, stock falls
Shares led decliners on Showbiz 50 TuesdayIron Man and the Incredible Hulk got no respect from investors Tuesday.
In its first financial report that includes revenue from producing its own movies, Marvel blew past Wall Street's expectations, then it raised guidance, and the stock plunged.
By the end of trading Tuesday, Marvel shares had dropped 11.5% to $31.19, and the stock led Tuesday's decliners on The Hollywood Reporter's Showbiz 50 stock index.
The culprit seemed to be the upgraded guidance. Analysts were predicting a boost in light of the solid boxoffice returns from "Iron Man," but Marvel merely lifted this year's target by $80 million to about $480 million, while some were expecting something in the $540 million range.
Marvel's profit jumped 61% to $46.7 million in the second quarter while revenue ballooned 55% to $156.9 million; just $28.9 million of that revenue came from "Iron Man" and "The Incredible Hulk."
The former has reached a $571 million worldwide boxoffice tally and the latter $246 million, but Marvel will recognize most of the revenue from the theatrical releases of those two films in future quarters, as well as from their DVD releases in the fall.
The next film from Marvel is a Lionsgate-licensed property, "Punisher: War Zone." After that are the Marvel-produced "Iron Man 2" set for April 30, 2010, and "Thor" on June 4 that year.
Marvel also is producing "The First Avenger: Captain America" set for a May 6, 2011, release. An analyst on the Marvel conference call Tuesday suggested that the movie might bump up against Sony's "Spider-Man 4," a Marvel-licensed property that's rumored for release around that same date.
Marvel Studios chairman David Maisel responded: "We always have a lot of options now that we control green light and our destiny with these films."
The success of "Iron Man," Maisel said, "is the start of a major new franchise for Marvel that will be a key part of our operations for many years to come." He was less enthusiastic about the longevity of "Hulk," though he noted that it is one of the top 10 films of the year.
Beyond the $28.9 million in film production revenue, Marvel posted $94.9 million from licensing, $31.8 million from publishing and $1.3 million from miscellaneous sources.
Analyst Michael Pachter of Wedbush Morgan Securities reiterated his "hold" rating on Marvel and $33 target on shares. "Despite the profitability of 'Iron Man,' we are reluctant to extrapolate this success far into the future," he said.