Lions Gate Entertainment Corp., the independent studio behind the “Saw” horror movies, rose to the highest level in more than four years on prospects for the March release of the film “The Hunger Games.”
Lions Gate jumped 11 percent to $10.83 at the close, the highest share price since August 2007. The gain, the biggest since October 2008, brings the increase this year to 30 percent.
Vice Chairman Michael Burns said on CNBC yesterday that the growing popularity of “The Hunger Games” books by Suzanne Collins boosts the outlook for the film. The company, based in Vancouver and run from Santa Monica, California, acquired rival Summit Entertainment this month. The purchase gave Lions Gate ownership of the “Twilight” teen vampire films, including one more theatrical release set for November.
“The trend seems to be our friend here,” Burns told CNBC after the market close yesterday. “We think it certainly feels like a monster.”
The first of four “The Hunger Games” films, about teens fighting for their lives in a post-apocalyptic world, may generate $200 million in domestic box-office sales, according to Matthew Harrigan, an analyst with Wunderlich Securities in Denver who recommends the stock. The movie opens March 23.
“The pipe dream was that this would be tantamount to the ‘Twilight’ franchise,” Harrigan said in an interview. “People aren’t willing to go there yet, but it’s looking possible.”
The first four “Twilight” films have taken in $1.07 billion in domestic box-office sales and $2.5 billion worldwide, according to Box Office Mojo, an industry tracker.
Investors may also be reassessing the company following its successful defense of a hostile takeover bid by Carl Icahn, a period of depressed cash flow and the acquisition of Summit, Harrigan said.
Lions Gate bought Summit for $412.5 million, most of it financed with the target company’s cash, plus assumed debt. Last week the company named Summit’s two top executives, Rob Friedman and Patrick Wachsberger, to lead its film division.