'Shrek' has Street seeing green
Analyst: '2007 will be best boxoffice year on record'The $122 million opening weekend of "Shrek the Third" had Wall Street busy Monday commenting on its impact on various companies and adjusting expectations not just for the film but the entire boxoffice as well.
Wedbush Morgan Securities analyst William Kidd raised his 2007 boxoffice forecast from $9.98 billion to $10.1 billion, a 6.3% increase compared with last year.
Based on consumer appetite for "Spider-Man 3," which grossed a record $148 million during its opening weekend this month, as well as that for "Shrek the Third," the analyst ratcheted his expectations higher for "Pirates of the Caribbean: At World's End" (at right), which bows Friday. Kidd now sees an opening "Pirates" weekend of $125 million, up from the $102 million he previously held, and total U.S. and Canadian boxoffice of $360 million, up from $317 million.
"With the first two of the May triple attack posting record-breaking results at the boxoffice, we cannot help but become more confident that 2007 will be the best boxoffice year on record," he said.
Kidd stopped short of boosting his domestic boxoffice estimates for "Shrek" (above), keeping it at $353 million despite its opening weekend being well above the $86 million he expected. This means that the analyst is shrinking his domestic boxoffice multiple to just 3.2 times opening weekend from 4.1 previously.
The "multiple compression" reflects his theory that tough competition this year has led to an "overlapping release window with other major films," and he added that "Spidey 3," relative to its predecessors, "has already started to show signs of such compression after its strong opening."
Bear Stearns analyst Spencer Wang, however, took not only his "Shrek" boxoffice prediction higher but also said its global boxoffice could reach more than $1 billion, far exceeding the $577.5 million that he forecast.
Such a showing will trickle down to the bottom line at Viacom Inc., whose Paramount Pictures is collecting an 8% distribution fee, Wang said. He predicts $45 million-$57 million of upside for Viacom in terms of EBITDA and reiterates his "outperform" rating and $49 target on Viacom shares.
DreamWorks Animation, meanwhile, is poised to benefit most from "Shrek," and Goldman Sachs analyst Anthony Noto said he recommends that investors buy shares "with 25% upside to our $36 price target."