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Analysts Unimpressed By Dreamworks Animation's Big Hit With 'Home'

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Dreamworks Animation Skg Inc. (NASDAQ: DWA) gained more than 8 percent early in Monday's session on unexpectedly high receipts from the weekend opening of its latest computer-animated comedy film called "Home."

Shares of the company jumped $1.95 to $24.63.

But a number of analysts remained skeptical.

"One profitable movie isn't enough," said FBR's Barton Crockett, who maintained an Underperform rating on the Dreamworks, while raising his price target 28 percent to $18.

Dreamworks' mean rating among 13 analysts is Hold with a $20.09 target, according to FactSet.

Crockett called the outlook for Home a "near-term positive," but cited write-downs on four of the company's past six films.

"Home," which includes voiceovers from pop stars Rihanna and Jennifer Lopez, took in $54 million over the weekend, versus analysts' expectations in the $30 million range.

Topeka's David W. Miller maintained a Sell rating and $17 target, but called weekend box-office figure "a huge upside surprise."

Miller, who had expected weekend receipts of $31 million for the film, now expects final net revenue from the film for Dreamworks of about $13.7 million, after deducting distribution fees paid to Twenty-First Century Fox Inc. (NASDAQ: FOXA) from gross receipts of $370 million.

Dreamworks posted revenue last year of $234.2 million and an adjusted loss of $3.08 a share.

Miller said unseasonably cold weather in the eastern U.S. may have "artificially" stoked demand.

But Morgan Stanley's Ryan Fiftal maintained an Overweight rating on Dreamworks and said its latest film could be "the foundation of a new franchise" with products related to the film.

Fiftal believes Dreamworks is shifting from a pure film studio into an "intellectual property creation and monetization engine."

Latest Ratings for DWA

Aug 2016BTIG ResearchTerminatesNeutral
May 2016TopekaUpgradesSellHold
May 2016PiperJaffrayDowngradesOverweightNeutral

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Posted-In: Barton Crockett David W. Miller FBRAnalyst Color Price Target Reiteration Intraday Update Analyst Ratings


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