Goldman Sachs Leaves Price Target Unchanged On DreamWorks Animation

According to Goldman Sachs, DreamWorks Animation SKG (NYSE: DWA) 6-month price target is unchanged at $26.

Goldman Sachs said that according to its channel checks, DreamWorks Animation's “Kung Fu Panda 2”, which opens on Thursday, May 26, should generate roughly $60-65 m in DBO in its first five days (Thursday–Monday), below the prior estimate of $75 m for the regular three day weekend. “As a result, we lower our opening weekend (three-day) estimate to $60 mn (down from $75 mn) and our DBO estimate to $225 mn (down from $250 mn), implying a open/ultimate DBO multiple of 3.8X, higher than the 3.5X average of the last 12 DWA films given the mostly positive reviews we have seen so far for the movie. We also increase our IBO estimate by the same amount to $550 mn, so that our WW box office remains $775 mn. IBO is now a 2.4X multiple of DBO, higher than the 1.6X average for DWA films, but in-line with “Madagascar 2” and “Shrek Forever After”, as we believe that international box is growing faster than domestic and that franchise films and cute animals play better overseas. As DBO is more profitable than IBO, our 2011-2013 EPS estimates lower to $1.58/$1.91/$1.33 from $1.66/$1.93/$1.34, previously.”

DreamWorks Animation SKG closed yesterday at $24.75.