LGF May Require a Partner to Bid for MGM

Analysts at Wunderlich Securities maintain their “hold” rating on Lions Gate Entertainment Corp (NYSE: LGF), while reducing their estimates for the company. The target price for LGF is set to $6.

The visibility into LGF’s GAAP and free cash flows has improved for the new release calendar. Lions Gate has been benefiting from lower P&A expenses on some theatrical releases, the analysts say. The company is expecting $150 million of annual profits from its film releases by 2012. LGF is expected to enjoy robust TV revenues during FY10.

Lions Gate is likely to issue a bid to acquire MGM. The analysts believe that the company may require a partner, such as JPO Morgan’s Equity One Partners or Carl Icahn, in order to make the bid credible. Wunderlich Securities has reduced its EPS estimate for 2010 from $0.03 to -$0.25.