Bloomberg News

Lions Gate Gains Most in 2 Years on ‘Hunger Games’ Sales

November 09, 2012

Lions Gate Entertainment Corp. (LGF:US) rose the most in more than three years after video sales of “The Hunger Games” helped quarterly profit beat analysts’ estimates and bolstered the company’s outlook for the rest of the year.

The shares (LGF:US) climbed 13 percent to $16.57 at 2:08 p.m. in New York after gaining 15 percent, the most intraday since January 2009. The stock, up 75 percent this year through yesterday, today was among the top performers in the Russell 2000 Index.

“Hunger Games” home-video revenue exceeded the studio’s expectations, Chief Financial Officer James Keegan said today on a conference call. Lions Gate sees continued revenue growth from the final “Twilight” film, set for a Nov. 16 release, and from foreign distribution deals that reduce risk on the next “Hunger Games” movie, Chief Executive Officer Jon Feltheimer said.

“We’re in a stronger position than ever to secure competitive terms with our distribution partners, create new output agreements around the world and attract creative talent,” Feltheimer said on the call.

Profit for the fiscal second quarter was $75.5 million, or 53 cents a share, compared with a net loss of $25.3 million, or 19 cents, a year earlier, the Vancouver-based company said yesterday in a statement. That beat $12.4 million, the average of analysts’ estimates compiled by Bloomberg.

“‘The Hunger Games’ profits really filtered through on the DVD,” said Matthew Harrigan, an analyst with Wunderlich Securities in Denver, who recommends buying the shares.

Novel-Based Films

Lions Gate is positioning itself as a major supplier of novel-based films catering to teenagers and young adults. The studio is releasing the final movie in the “Twilight” vampire romance series and is developing films based on the books “Ender’s Game,” “Chaos Walking” and “Divergent.”

“They’ve been on a roll creatively for a while now and this is the first quarter you can see that flowing into the financials,” said Harrigan. “The real story is their ability to develop franchises.”

Lions Gate acquired the “Twilight” finale through the acquisition in January of closely held Summit Entertainment for $412.5 million.

Sales almost doubled in the quarter ended Sept. 30, to $707 million. Revenue was ahead of the average-analyst estimate of $623.4 million.

While the company hasn’t offered a forecast for fiscal full-year sales and earnings, analysts project (LGF:US) net income of $76.7 million on sales of $2.51 billion.

To contact the reporter on this story: Michael White in Los Angeles at mwhite8@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net


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Companies Mentioned

  • LGF
    (Lions Gate Entertainment Corp)
    • $33.8 USD
    • 0.51
    • 1.51%
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