News Column

Lionsgate slumps on fiscal 4Q results

May 30, 2014

NEW YORK (AP) Shares of Lionsgate fell Friday after the studio behind franchises like "Twilight" and "The Hunger Games" reported disappointing results in its fiscal fourth quarter.

The company's revenue was almost $100 million less than Wall Street expected. Its stock declined $3.73, or 12.6 percent, to $25.80 in afternoon trading.

Formally known as Lions Gate Entertainment Corp., the company said its net income fell 70 percent, to $49.2 million, or 33 cents per share. Excluding stock-based compensation costs and costs related to debt retirement, Lionsgate said it earned 42 cents per share. Revenue fell 8 percent, to $721.9 million from $785.7 million.

Analysts expected net income of 40 cents per share and $817.7 million in revenue, according to FactSet.

Cowen and Co. analyst Doug Creutz said Lionsgate's revenue from the box office, home video, and television licensing were all less than he expected. He rates the stock "Market Perform" with a price target of $29 per share.

Wunderlich Securities analyst Matthew Harrigan, who called the lower TV revenue "puzzling," said investors may have questions about how the company will fare after the "Hunger Games" franchise ends. However he said Lionsgate still has important franchises like the "Divergent" and "Now You See Me" films, and he added that Lionsgate and Summit have a strong track record in marketing young adult films while a lot of other potential franchises have failed.

He rates the Santa Monica, California, company's stock at "Buy" with a price target of $43.

The third "Hunger Games" film is scheduled for release in November 2014 and the fourth and final movie is set for release in November 2015. "Divergent," the first of a planned four-movie series, opened on March 21. The company's fiscal fourth quarter ended March 31.

In fiscal 2014 Lionsgate's net income fell 35 percent, to $152 million, or $1.04 per share. Revenue fell 3 percent to $2.63 billion.

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Source: Associated Press

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