These gems outshine
Analyst sees sparkle in media stocksAre Lionsgate, Marvel Entertainment and Crown Media Holdings among the more attractive but overlooked media and entertainment stocks?
Investment bank Natixis Bleichroeder thinks so, and it put the spotlight on these and other small- and mid-cap stocks this week at its annual "Hidden Gems" conference in New York.
Natixis analyst Alan Gould last month raised his rating on stand-alone studio Lionsgate from "hold" to "buy" while maintaining his $12.50 price target, which provides more upside from current trading levels.
"It's one of my favorites in the smaller cap universe," he said.
In his recent upgrade report, the analyst argued: "Lionsgate's theatrical cold streak has begun to turn" thanks to "3:10 to Yuma" and other recent releases, with "Saw IV" also expected to do well when it launches Oct. 26. He added that the firm continues to grow its TV business, something that often gets overlooked, and "faces little risk from a potential economic downturn" thanks to its pure content focus.
The Natixis analyst also likes superhero powerhouse Marvel, citing the company's first two self-financed films next year as "the next major catalysts" for the stock, on which he has a $30 price target — again providing more upside but only a "hold" as it has moved "already too close" to his target, Gould said.
But boxoffice success for "Iron Man," "The Incredible Hulk" and other self-financed movies "could result in higher earnings, sequel value and a film library for a recurring revenue stream and bolster toy and licensing sales in 2008 and 2009," Gould argued in the report.
Beyond film players Lionsgate and Marvel, Gould and his Natixis colleagues also put the spotlight on sports entertainment firm WWE, TV network firm Crown Media Holdings, TiVo, Liberty Global and Liberty Interactive as well as News Corp.-controlled set-top box technology firm NDS Group and video rental and VOD service firm Rentrak Corp. Gould owns shares in the latter two stocks.
Crown Media is "one of the last indie cable networks with Oxygen sold this week" to NBC Universal, Gould said in explaining why that stock could have upside. "But it doesn't make sense to run an independent network, so we expect a sale" to a big media company down the line.