The stock of DreamWorks Animation was down as much as 5 percent in early Monday trading, much closer to it 52-week low than its high after the disappointing opening weekend for its latest release The Rise of the Guardians.
As of 9:40am ET, the stock was down 4.5 percent at $17.24. That gave the company a market value of $1.5 billion.
Before Monday, the stock had over the past year traded between $16.35, a 52-week low set in January, and $22.98, a level reached only earlier this month.
"The Rise of The Guardians' $32.6 million debut (versus our $55 million estimate and $63.5 million Hollywood Stock Exchange estimate) was one of the most disappointing releases in the company's history - especially in light of the long weekend, record-breaking U.S. box office gross over the weekend, the holiday-focused plot and lack of competition," said Janney Montgomery Scott analyst Tony Wible in a report. "While we believe the film will have a longer than average tail, near-term numbers need to drastically come down and the stock will face worse than typical post-release pressure."
But he maintained his "buy" rating on DWA shares, arguing: "This could create a good buying opportunity, as we still see a forthcoming inflection in earnings power that is not tied to this film, but rather a string of new unrelated growth opportunities - News Corp. [distribution] deal, Netflix savings, Classic Media, TV network and China."
Wible did, however, reduce his fair value estimate for the stock to $22 from $24.50.
Stifel, Nicolaus analyst Benjamin Mogil reduced his financial estimates for the animation studio after the weaker-than-expected opening weekend, citing "the weak domestic opening. "We see the next two weeks as critical for the title's performance as the title enters the key international markets while domestic performance will indicate how strong word of mouth for the title is," he said. "Based on the current domestic trends, we see a loss for the title as likely."
He maintained his "hold" rating on the stock and reduced his U.S. box office revenue estimate for the film to $125 million from $145 million.
Lazard Capital Markets analyst Barton Crockett said that "while Rise of the Guardians has opened in fewer than 10 territories internationally to date, early results suggest international will not compensate for the domestic shortfall." For example, he highlighted that In Russia, the biggest market so far, it generated $5.85 million during opening weekend, while Puss in Boots grossed $14.88 million, How to Train Your Dragon $7.28 million, and Megamind $6.94 million.
If international box office comes in as low as U.S. results compared to expectations, "we believe the movie could move from the $39 million profit [estimate] now in our DWA model to a $15 million loss," Crockett said.
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