Piper Jaffray Hikes Lionsgate Estimates...Excited About Hunger Games, Divergent, Power Rangers & More

In a report published Friday, Piper Jaffray analyst James M. Marsh maintained an Overweight rating on

, while raising the price target from $38 to $45. Analyst James Marsh said that Lions Gate was likely to have a "relatively slow start" to FY16, with revenues down 7 percent to $420M, primarily on account of Mockingjay 1 and Insurgent comping to Catching Fire and Divergent. "We also believe given Mockingjay's success with electronic sell-through (EST), much of packaged media sales were likely front-loaded in the prior quarter." Marsh added that the remainder of FY16 was likely to be positively impacted by "a robust slate and the growing Lionsgate TV business." The EBITDA estimate for FY16 has been raised slightly by 2 percent to $395M. Marsh added that this was likely to be more "back-loaded" due to the release of fourteen new television series and Mockingjay 2 later this fiscal year. In the report Piper Jaffray noted, "Longer term we like Lionsgate's feature film release slate (Gods of Egypt, Power Rangers, Odyssey and a possible Twilight extension), plus think the company will find more ways to work more symbiotically with John Malone's media empire (think Starz, Liberty Global and Discovery)." The EBITDA estimate for FY17 has been raised by 10 percent to $480M, representing 22 percent growth y/y. "We continue to be bullish on pure-play content names such as LGF," Marsh commented.