Is Lionsgate’s Stock Boom About To End?

Cowen and Company analyst Doug Creutz raises that concern this morning in a report that downgrades Lionsgate to “market perform” from “buy.” The production company’s been a Wall Street hero with the success of its The Twilight Saga and The Hunger Games franchises. Ender’s Game, The Hunger Games: Catching Fire, and Divergent. “Although we tend to think that these three films will, taken as a whole, perform well, we think there is a risk of a sell-the-news reaction even if expectations are met,” Creutz says. “If one or more films underperform, however, we think there is a risk of significant downside to shares.” He’s concerned that Ender’s Game — about a boy who’s given the responsibility to lead the world’s military against an alien invasion — will fail to reach wide audiences after its November 1 release. In addition to “its hardcore sci-fi theme and difficult source material,” Creutz says that book author Orson Scott Card’s opposition to gay marriage “could cause some of the potential audience to avoid the film.” The analyst projects a domestic box office of $70M, which probably wouldn’t be sufficient to justify sequels. (more…)

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