UPDATE: Morgan Stanley Raises PT on Dreamworks Animation On Stronger Than Expected Margins

In a report published Monday, Morgan Stanley analyst Benjamin Swinburne maintained an Underweight rating on Dreamworks Animation SKG, Inc.

, raising its price target to $31.00. According to the report, “We raise long-term EBITDA forecast by 15-20% following (1) stronger than expected 3Q margins, (2) new disclosures that highlight the profitability of the consumer products (CP) business, (3) a stabilizing home video market (DVD+EST), and (4) our updated assumption that Turbo will be profitable (vs. a $10M write-down prior). We are moderately above near-term (2014E) consensus; however, our ‘What's in the Price' analysis indicates DWA's ~$35 market price currently implies a ~$400M medium-term EBITDA run rate (see Exhibit 3, pg 4), which is >25% above our ‘steady-state' earnings power est. (Ex 2, pg 3), leaving us cautious on the current risk/reward.” DWA closed Friday at $35.23.