Lionsgate Entertainment Corp. is having a blockbuster year, with its shares surging to new all-time highs ahead of the much-anticipated premiere of “The Hunger Games” next week.
The movie and television studio has benefited both from its recent acquisition of rival Summit Entertainment LLC and Carl Icahn exiting his position in the stock. But what is propelling shares the most lately is the buzz surrounding “The Hunger Games” movie. Despite recent gains — the stock broke free of its multi-year trading range of $6 to $8 in late 2011 and now trades above $13 — a strong box office performance by the film could help propel the stock even higher.
“The Hunger Games,” first published in 2008, is set in a post-apocalyptic world where children are annually sent to compete in a televised battle where only one can survive. The movie is based on the first book of a trilogy written by Suzanne Collins.
Current expectations for the film are lofty. Evercore Partners and Wunderlich Securities are assuming between $200 million and $230 million in domestic box office gross for the movie. On the Hollywood Stock Exchange, the opening weekend market forecast is $129 million, with a four-week forecast of $295 million.
A spokesman for Lionsgate declined to comment.
“It’s clear at this point that ‘The Hunger Games’ is headed for a very successful launch,” said Doug Creutz, an analyst at Cowen & Co. “The question is how successful.”
Traditionally, investors often short the stock of the production company heading into big movie premieres, said Wunderlich analyst Matthew Harrigan.
But this doesn’t seem to be the case with “The Hunger Games,” he said. People will still be surprised when it does well, he predicted, citing the solid marketing job the studio has done ahead of the premiere, particularly in the form of social media. He has a $19 price target on the stock.
From mid-2009 to mid-2011, Lionsgate’s stock appeared to be stuck between $6 and $8, but in the past few months the stock has broken free, trading as high as $14.46, a new all-time high, earlier this year. It now trades around $13.20.
