Barrington Reiterates on Lions Gate After 'Hunger Games' Release

In a report published Monday, Barrington Research analyst James Goss reaffirmed an Outperform rating on Lions Gate Entertainment Corp (NYSE: LFG), with a $41.00 price target.

According to the report, the new sequel in The Hunger Games franchise, Catching Fire, could land somewhere in the $850-900M range of the global box office. The film has made $425M domestically, already passing it's predecessor which did $408M domestically.

“The second film will likely top the domestic total and settle in at around $450 million overseas, bringing its global aggregate figure to around $875 million, in a range of $850-900 million, a more than 25% gain over the original,” the report said. “The film could potentially crack the all-time top ten domestic films.”

Some highlights from the report included:

-”We are slightly increasing our third quarter figure to $0.63 and full-year figure to $1.20 to reflect the success of The Hunger Games: Catching Fire.” -”Lionsgate's one-third interest in EPIX, with EBITDA potential increasing to roughly $100 million from about $80 million with this deal, implies a substantial contribution to corporate targets and overall value.” -”Our $41 price target now assumes an EV/Sales multiple of 2.3x our fiscal 2015 estimates and corresponds to an EV/EBITDA multiple of about 15.5x.” -”The stock traded up to a high of nearly $38 several weeks prior to the Hunger Games premiere, but then declined more than 20% and is now trading 18% below that peak level.”

LFG closed Friday at $31.62 with shares trading up at 2.69%.