Lions Gate Soars to Profit on ‘Twilight’ Home Video Sales
Stock Chart for Lions Gate Entertainment Corp (LGF)
Lions Gate Entertainment Corp. (LGF), maker of the “Twilight” teen vampire movies, rose the most in six months after posting fourth-quarter profit that beat analysts’ estimates, helped by home-video sales from the series.
The shares gained 6.8 percent to $29.94 at 11:10 a.m. in New York after climbing as much as 7.2 percent, the most intraday since Nov. 9. They had surged 71 percent this year through yesterday, as the Russell 2000 Index rose 17 percent.
The profit will help Lions Gate meet or exceed its May 2012 forecast of $900 million in adjusted earnings before interest, taxes, depreciation and amortization over the following three years, Chief Executive Officer Jon Feltheimer said on a conference call today. He cited the performance of films such as “The Hunger Games” and “Divergent,” the first in a new series of movies based on young-adult novels.
“If they continue to create these franchises, there are still upsides on the stock,” said Matt Harrigan, a Denver-based analyst at Wunderlich Securities Inc., who recommends buying shares of the company, run from Santa Monica, California.
The studio has staked out the young-adult market. The first “Hunger Games” sequel is scheduled for release in November. “Divergent,” based on a book trilogy by Veronica Roth, is set for a March 2014 release. “Divergent” is set in a dystopian world in which teens are forced into specific social groups.
“Owning the top young-adult franchises, ‘The Hunger Games’ and ‘Twilight,’ gives us enormous catalysts” to build new franchises, Feltheimer said on the call.
Lions Gate also plans to expand relationships with Web-based television services such as those of Netflix Inc., Hulu LLC and Amazon.com Inc., he said. The studio’s TV comedy “Orange Is The New Black” starts on Netflix in July.
The studio yesterday reported net income of $163 million, or $1.10 a share, compared with a loss of $22.7 million, or 17 cents, a year earlier. Revenue rose 22 percent to $785.7 million in the period ended March 31, beating estimates of $746.5 million. Analysts had forecast profit of 43 cents, the average of nine estimates compiled by Bloomberg.
The January 2012 acquisition of Summit Entertainment brought the “Twilight” films to Vancouver-based Lions Gate. The deal also gave the studio potential franchises that also include “Ender’s Game,” set for November release.
Quarterly results also were helped by revenue from television, which include the “Mad Men” and “Anger Management” series, Harrigan said in an interview.
Profit also was bolstered by international box-office sales for “The Impossible,” a film about the 2004 Indian Ocean tsunami, and the home-video release of low-cost horror films, including “Sinister” and “The Possession,” Harrigan said.
“The Impossible,” with only $19 million in sales in the U.S. and Canada, took in $153.5 million in international markets, according to researcher Box Office Mojo.
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