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Barclays Reiterates an 'Underweight' on DreamWorks Animation (DWA); No Longer of Paramount Importance

July 7, 2011 2:04 PM EDT
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Price: $40.97 --0%

Rating Summary:
    3 Buy, 6 Hold, 6 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 0 | Down: 0 | New: 0
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Barclays reiterates an 'Underweight' on DreamWorks Animation (NASDAQ: DWA), PT $18.

Barclays analyst says, "Paramount Pictures announced yesterday that it will launch a separate division focused on the production of CGI animated films. The new division will target one release a year, beginning in 2014. We believe the emergence of another viable competitor in the CGI animation space will further increase supply of CGI animated films, reducing DWA's relative competitive advantage. We therefore reiterate our Underweight rating and price target."

"Renewal of distribution deal with Viacom (NYSE: VIA-B) less likely: We believe Paramount's decision to venture into CGI animation will complicate discussions with DWA over their distribution deal, and will ultimately make a renewal less likely. While DWA may ultimately find a lower-cost replacement for Paramount, we believe DWA management will have difficulty finding a distributor with the same scale at a similar fee level."

For more ratings news on DreamWorks Animation click here and for the rating history of DreamWorks Animation click here.

Shares of DreamWorks Animation closed at $20.12 yesterday.


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