DreamWorks Animation Stock Rises as 'Home' Opening Exceeds Expectations

Analysts say the first-weekend performance reduces the risk of a write-down on the movie, but they disagree on whether it will change investor sentiment.

DreamWorks Animation shares rose nearly 7 percent Monday after the better-than-expected opening weekend for Home.

Analysts said the first-weekend performance reduces the risk of a write-down on the movie for the studio led by CEO Jeffrey Katzenberg.

The stock ended $1.49 higher on Monday to $24.17.

B. Riley & CO. analyst Eric Wold wrote: "Opening weekend box office for Home exceeds expectations," adding that the "write-off risk [is] reduced, but not eliminated."

Some were even more optimistic: "The surprisingly strong results eliminate risk of another impairment and should build confidence in DWA's recovery," said Janney Montgomery Scott analyst Tony Wible.

But other Wall Street folks disagreed that the performance would necessarily boost investor confidence in the company.

"DWA's Home is estimated to have earned $54 million at the domestic box office in its opening weekend, well above expectations for $30-40 million," said Cowen analyst Doug Creutz. "While Home's performance is a positive for shares, we remain hesitant to assume permanently improved film performance given the increasingly competitive market for big-budget tentpole films."

He acknowledged, though, that Home represents "a much needed win for Mr. Katzenberg and management amidst restructuring and poor recent film performance."

Email: Georg.Szalai@THR.com
Twitter: @georgszalai