Lionsgate shares up on 'Orange,' TV successes
Lionsgate is getting a boost on Wall Street after beating estimates despite the studio's lackluster post-The Hunger Games theatrical portfolio.
Revenue from its TV programming helped the studio post Q4 revenue of $791.2 million surpassing the $646 million from the same period a year ago, and beating expectations of $741 million.
Shares (LGF) were up nearly 8% in midday trading Thursday to $21.31. Lionsgate shares, which had fallen 37% since the beginning of the year, on Wednesday rose 15% in aftermarket trading.
That activity came after the studio posted better than expected earnings of $10.9 million, or 7 cents per share for the quarter that ended March 31. Analysts polled by S&P Global Market Intelligence had expected a $3.8 million loss, or a loss of 3 cents a share. In the same prior-year period, Lionsgate reported fourth-quarter earnings of $19.6 million, or 14 cents a share.
The television division's global deal for Netflix series Orange is the New Black and revenue from reality TV producer Pilgrim Studios (Ghost Hunters), which Lionsgate acquired a 50% stake in November, helped drive record TV revenues of $669.9 million, up from $579.5 million the year before.
Fiscal year revenue of $2.35 billion beat expectations of $2.3 billion. Last year, Lionsgate posted revenue of $2.4 billion.
"Our television business had a record year with all categories contributing great results, and we expect its strong growth to continue this year," said Lionsgate CEO Jon Feltheimer in a statement.
However, Lionsgate had to withstand disappointing box office performances from films released during the quarter including The Divergent Series: Allegiant, Dirty Grandpa and Gods of Egypt.
"Although last year's film slate didn't match the performance of previous years, this year's slate is bigger, more balanced and is expected to generate greater profitability," Feltheimer said. "We also expect to continue creating long-term value by deepening our portfolio of brands and franchises and solidifying our status as a preferred partner to owners of intellectual property, 3rd-party distributors and digital platforms worldwide."
Among Lionsgate's upcoming films is Woody Allen's Cafe Society, which will get a July 15 theatrical release before hitting Amazon Prime.
Like many other Wall Street analysts, Cowen & Co. analyst Doug Creutz had reduced earnings expectations in recent weeks on “the poor performance of multiple (fiscal Q4) films,” he said in a note after the studio released its earnings Wednesday. "We think Lions Gate faces an uphill climb to get back to historical levels of film profitability in (the current fiscal year) after a disappointing FY16," said Creutz, who rated the stock at "Market Perform" with a target price of $22.
"The company's reliance on low- and mid- budget films looks less attractive given the increasing concentration of success in the market and growing number of franchise films competing for shrinking real estate," he wrote.
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