Analyst: DreamWorks Animation Films 'Simply Not Monetizing Anywhere Near Historic Norms'

DreamWorks Animation SKG

BTIG's Richard Greenfield cites lower "Puss in Boots" expectations in cutting his 2012 earnings estimates and stock price target.

NEW YORK - Shares of DreamWorks Animation opened slightly lower on Wednesday after BTIG analyst Richard Greenfield cut his price target on the stock and his 2012 earnings estimates, citing lower expectations for Puss in Boots, among other things.

He reduced his price target from $18 to $15.50 and maintained his "sell" rating on the stock.

"DWA’s key challenge is that their creative output (movies) is simply not monetizing anywhere near historic norms," Greenfield wrote in a report. "While the growth of international markets (especially Russia and China) and 3D ticket premiums have helped DWA box office grosses, the rapid decline in the home entertainment market as consumers shift from buying to renting is far outweighing the box office benefits." 

Meanwhile, DWA’s films have fallen short in the U.S., "with box office outperformance largely occurring in markets where ancillary revenue streams are far less robust than in the U.S.," Greenfield said.

He said his reduction of his 2012 earnings estimate to $1.25 per share from $1.54 was "driven by lower box office assumptions for Puss in Boots (3D and Imax 3D premiums increasingly hard for consumers to justify for animated films) and reduced ancillary revenues for Puss in Boots and Madagascar 3."

At 10:40am ET, DWA shares traded at $18.74, down 1.9 percent. Over the past year, the stock has traded between $16.50 and $37.74.


Twitter: @georgszalai