'Lego Batman' Could Beat Opening Weekend Estimates

Wunderlich believes the opening weekend estimate of Time Warner Inc (NYSE: TWX) movie "The LEGO Batman" is conservative, while the brokerage maintained its Buy rating on the shares ahead of the company’s February 8 earnings print.

Is The Estimate Conservative?

“We actually think the H$65.5 million opening estimate could be conservative, with tracking suggesting a possibility for an $80 million vicinity opening,” analyst Matthew Harrigan wrote in a note.

Harrigan kept his fourth-quarter estimates for Time Warner unchanged, calling for 10.3 percent gain in top line to $7.810 billion and 21.1 percent growth in adjusted operating income to $1.702 billion. This equates to $1.19 in adjusted EPS, in line with consensus.

In addition, the analyst expects sales increase of 7 percent to $2.846 billion for Turner segment, and sees global HBO sales up 4.6 percent to $1.477 billion.

Harrigan anticipates top line growth of 7 percent plus for HBO starting next year through 2020, benefiting from affiliate fee reworks that better monetize underpriced linear viewing.

Also, the analyst projects studio sales rise 15 percent to $3.801 billion, driven by the success of "Fantastic Beasts," with mid-size successes "The Accountant" and "Collateral Beauty."

Bottom Line: Staying At Buy

“We maintain a Buy rating on Time Warner moving into tomorrow's earnings, as risk to the AT&T Inc. (NYSE: T) deal approval is cushioned by our assessment of fair public market value for TWX in the $100 vicinity,” Harrigan added.

Shares of Time Warner closed Monday’s trading at $96.36 versus Harrigan’s price target of $107.50.