Lionsgate shares drop ahead of earnings


Shares of Lionsgate Entertainment Corp. dropped nearly 5% Wednesday on investor fears that the independent film and television production company's new movies did not perform as well as expected in the April-June quarter, analysts said.

The company is set to report fiscal first-quarter results

Thursday. Analysts, on average, expect Lions Gate to post a net loss of 25 cents per share on revenue of $208.2 million, according to Reuters Estimates.

"Word is that Lionsgate might have overestimated revenues from their box office first-quarter-release films. Three major contributors to this were 'Hostel Part II,' 'The Condemned' and 'Delta Farce,"' said William Lefkowitz, options strategist at brokerage firm vFinance Investments in New York.

"There are also questions regarding the film 'Bratz' which opened up this past week," Lefkowitz said.

SMH Capital analyst David Miller said the drop in share price ahead of first-quarter results is typical for Lionsgate.

"It is usually wobbly ahead of (first-quarter) earnings," Miller said. "They are reporting what is historically their worst quarter."

He added, however, that despite a disappointing performance by "Hostel 2," the company will likely turn a profit on the film and had plenty of other titles to make up for it.

"That's why you manage a slate of films -- the hits will pay for the misses," he said.

Shares of Lionsgate were down 49 cents to $9.46 in afternoon trade on the New York Stock Exchange.