Lionsgate 'Operating In The Sweet Spot' Of Media, Says A Bullish Loop Capital Markets

For Lionsgate Entertainment Corp. LGF, stronger investment in the Starz division and greater spending on original programming could mean continued competitive positioning, according to Loop Capital Markets. 

The Analyst

Analyst Alan Gould maintained a Buy rating on Lionsgate and lowered the stock’s price target from $77 to $75.

The Thesis

Lionsgate management has implied the company is planning to increase investment in its Starz network division, which is responsible for two-thirds of Lionsgate’s revenue, Gould said in a note. 

The studio plans to invest in more original programming, further upping its asset value and subscriber retention, the analyst said.

Lionsgate’s film division should also benefit from the return of producer Joe Drake as co-chair, Gould said. Drake famously approved the “Hunger Games” series, the analyst said. 

While Lionsgate took a $24-million film impairment charge in its latest quarter, the costs are priced in and could create an attractive entry point given the company’s strong fundamentals, Gould said.

“We continue to believe that the company is well-positioned operating in the sweet spot of the media industry, content creation and as an attractive asset in a consolidating industry environment.”

Price Action

Lionsgate shares were down 1.53 percent at the close Thursday. 

Related Links:

Benzinga's Top Upgrades, Downgrades For March 22, 2018

Bernstein: Lionsgate Is David In a Sea Of Goliaths

"The Hunger Games: Mockingay — Part 2" still courtesy of Lionsgate.