How To Train Your Dragon 2’s lower-than-expected $50M domestic box office in its opening weekend left many DreamWorks Animation shareholders feeling burned. The company’s stock price is down 12.2% in early trading as several analysts lowered their box office estimates for the film – which they’d hoped would help DWA recover after it took writedowns on three of its four previous releases. Cowen & Co’s Doug Creutz called Dragon 2’s performance “somewhat 2-thless” – he figured it would come in closer to $60M — and lowered his ultimate worldwide box office estimate by 20% to $650M. If Dragon doesn’t “significantly grow box office,” then it’s “fair to ask if there are any implications about the strength of DWA’s brand.” Sterne Agee’s Vasily Karasyov says he expects Dragon 2 to gross $180M domestically, nearly 20% below the Street’s pre-opening consensus, and 17% below the gross for the first film. That kind of performance from a sequel to a hit would worry investors “given that 3 of the 7 films scheduled for release through the end of fiscal 2016 are sequels, including How To Train Your Dragon 3.”
But others say it’s too early to judge. B. Riley & Co’s Eric Wold says that animated films typically have long runs in theaters – and notes that Dragon 2 was well received in reviews on Rotten Tomatoes. He sees the $50M opening weekend “as a glass half full and will both monitor domestic trends over the coming weeks relative to our projections as well as how the remaining international markets play over the coming weeks/months given that 65% of our total box office projection for this movie is driven by international markets.” Janney Capital Markets’ Tony Wible also says that “Based on the open, lack of competition, and positive reviews, we anticipate a relatively strong/long domestic run.”
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