Wunderlich Previews Lions Gate Q2 Earnings, Maintains Buy

Wunderlich’s Matthew Harrigan noted that Lions Gate Entertainment Corp. (USA) LGF shares have been soft during the current week due to the “already visible FQ2 LGF box office,” while expressing concern regarding the outlook for the company’s M&A partner, Starz STRZA.

Harrigan maintains a Buy rating on Lions Gate Entertainment, while lowering the price target from $28 to $26.

Q2 Expectations

Lions Gate Entertainment is schedule to report its FQ2:17 results after market close on October 13, and the analyst expects sales growth of 17.4 percent to $559.8 million for the quarter, with the adjusted EBITDA expected at only $4.1 million.

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“FQ2 results are dampened by marketing outlays for new films, including the release of Deep Water Horizon on the final day of the quarter. Estimated theatrical revenues for FQ2 are unchanged at $71.2 million,” Harrigan mentioned.

The diluted and adjusted EPS is expected at $0.20 and $0.14, respectively.

Executive Departures

The analyst also noted that Bobby Cohen was leaving his position as co-president of production and moving into a production deal. This follows the departure of Rob Friedman in September as the co-chair of Lions Gate Motion Picture Group.

“Although there is considerable angst on the near-term release slate, musical La La Land and Hacksaw Ridge garnered strong reviews at Venice Film Festival. The larger project focus is now on the March 2017 Power Rangers with Saban,” Harrigan stated.

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Posted In: Analyst ColorEarningsLong IdeasNewsPrice TargetPreviewsReiterationAnalyst RatingsMoversTechTrading IdeasBobby CohenLions Gate Motion Picture GroupMatthew HarriganRob FriedmanWunderlich
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