DreamWorks Animation SKG Inc. had a Shrek of a day in the stock market.
The shares gained as much as 8.3 percent after an analyst recommended buying the stock on optimism over the company’s tilt toward younger moviegoers and signs of stronger growth in its television programs.
The Glendale, California-based company closed up 86 cents at $28.32 at 4 p.m. in New York after Stifel Financial Corp. analyst Benjamin Mogil raised the company’s shares to buy. DreamWorks has gained 27 percent so far this year. Mogil said that investor meetings with management were “very positive” and showed that DreamWorks is re-focusing its films on younger audiences.
That’s “a positive as we view the animation market as increasingly capping out at a younger age,” Mogil wrote in a note to clients. On the TV side of the business, Mogil wrote that critical acclaim for the company’s shows will allow for continued growth into 2017.
The studio behind “Shrek” and “How to Train Your Dragon” is working to improve its film slate after several disappointing releases. Four of the company’s past seven films lost money.
Chief Executive Officer Jeffrey Katzenberg said last month that the company’s newest film, “Home,” is evidence that changes in the animation business are “beginning to take hold.” He said 2015 will be a transitional year following production and job cuts in January.
Animated feature films must overcome challenges of appealing to both children and parents and maximizing interest from an increasingly young audience, Mogil wrote. These factors make DreamWorks’ schedule of light comedies directed at younger viewers a positive.
“Where once it was common to see 10-year-olds at animated movies, the age cap has been lowered in recent years,” he wrote.