DreamWorks Animation Shares Slip After Analyst Lowers Forecast For ‘Turbo’

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The company’s had a strong run lately following better-than-expected box office sales for the March release The Croods, and potentially lucrative TV production deals with Netflix and Super RTL.

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DreamWorks Animation shares are up more than 17% over the last two months and 55.5% over the last five. But the bull run may be over, B. Riley & Co’s David Miller says today. DWA’s stock price is down 4.5% to $28.24 in mid-day trading after the analyst changed his recommendation to “neutral” from “buy.” “Despite our best attempts at stretching the rubber band further, we simple cannot justify a higher price target at this juncture” from his current price of $29. He lowered his global box office estimate for DWA’s Turbo by 22.6% to $395M ahead of its debut in major markets including the UK, Germany, France, Spain, Holland, and New Zealand. The film about a snail that becomes an Indy 500 speedster cost about $130M to produce which means it “will be profitable, but less so in comparison to past iterations of our working models” for DWA releases. Miller cut his 2013 earnings estimate for DWA by 27.1% to 70 cents a share. He adds that at Friday’s closing price of $29.58 DWA was more expensive than Lionsgate based on multiples of cash flow and earnings.

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