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Wall Street Thinks DreamWorks Can Crack China

Wall Street Thinks DreamWorks Can Crack China
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  • Dreamworks Animation Skg Inc (NASDAQ: DWA) shares have appreciated 16.51 percent over the past three months to $24.70 on December 8.
  • Macquarie’s Amy Yong has maintained an Outperform rating on the company, with a price target of $30.
  • Yong believes that the company has the ability to “crack” the more demanding Chinese and millennials demographics because its content appeals to this demographic across the globe.

According to the Macquarie report, “Shrek, Madagascar, Kung Fu Panda, and How to Train Your Dragon are core, and more franchises are on the way; creating IP with universal appeal that’s playable, repeatable, and available is key.”

Analyst Amy Yong believes that Dreamworks is one of the few companies that can use both old and new media equally well through AwesomenessTV, as well as its emerging mobile strategy.

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China is expected to become the largest movie market in the world by 2018, and Yong believes that Dreamworks is well positioned to capitalize on this, with "Kung Fu Panda" scheduled to open on January 29, just before the Chinese Lunar Year on February 8.

“Kung Fu Panda 2 was the highest grossing animated film in China with US$96m in box office revenue. Given timing and promotional activity, we are forecasting the 3 to gross ~20 percent higher to ~US$120m,” Yong stated.

Yong also believes that the company has “cracked the code” to penetrating into the children, tweens, millennials and millennial moms demographics. AwesomenessTV also has 150 million subscribers, with more than 800 million views per month, and a momentum that is continuing to gain at a fast pace.

“As an independent studio, DreamWorks can easily capitalize on emerging linear, digital, and global TV platforms,” Yong added.

Latest Ratings for DWA

Aug 2016BTIG ResearchTerminatesNeutral
May 2016PiperJaffrayDowngradesOverweightNeutral
May 2016TopekaUpgradesSellHold

View More Analyst Ratings for DWA
View the Latest Analyst Ratings

Posted-In: Amy Yong China Macquarie ResearchAnalyst Color Long Ideas Reiteration Analyst Ratings Trading Ideas Best of Benzinga


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