'Spidey' lifts Marvel; DWA on move

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NEW YORK -- Smaller entertainment firms Marvel Entertainment and DreamWorks Animation got some Street love last week, with bullish analyst reports boosting the stocks.

Sanders Morris Harris analyst David Miller raised his second-quarter earnings estimate for Marvel by 2 cents to 48 cents per share, citing "extremely robust volume thus far in the wholesale channel for 'Spider-Man'-related toys manufactured by Hasbro."

Marvel shares rose as much as 6%, inching close to their 52-week high.

With "Spider-Man 3" set to hit theaters next month, "informal checks at select Southern California toy retailers reveal that unit sales for Hasbro's new 'Spider-Man' toy line are pacing approximately 10% ahead of the same benchmark achieved at this point in 2004," when "Spider-Man 2" was released, Miller wrote.

As a result, the analyst boosted his second-quarter toy revenue estimate to $45 million, from $40 million, and his overall Marvel revenue projection for the quarter by $5 million to $127.2 million.

Pali Research analyst Richard Greenfield last week upgraded DreamWorks Animation shares from "neutral" to "buy" in a note titled "Even an ogre can become attractive."

Greenfield argued that DWA "has spent the better part of the past two and half years suffering one disappointment after another" as it had to take writedowns on various films that underperformed expectations.

DWA shares rose as much as 5% the day of the upgrade, coming close to their 52-week high.

"Our renewed enthusiasm for DWA shares is based on our belief that DWA will have greater success and consistency to their feature film release schedule ... in others words, DWA's 'batting average' should notably improve," the analyst concluded.

"We believe DWA has the ability to earn $1.50 in earnings per share on average between 2007-2010, compared to the 56 cents it has averaged over the past couple of years."

Greenfield has a $35 target price on the stock.

"While more profitable film output over the next few years (particularly the next 24 months) is a key component of our upgrade to 'buy,' we are also encouraged by the need for upward revisions in our ultimate DVD unit forecasts for several of DWA recent releases," according to Greenfield.

Goldman Sachs analyst Anthony Noto late last month also upgraded DWA shares to "buy," citing 20%-plus upside potential to his new price target of $36, up from $28 previously.
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