DreamWorks (DWA) Weak but 2014 Could Be 'Inflection Point'

February 6, 2013 10:42 AM EST Send to a Friend
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Price: $22.90 -3.54%

Rating Summary:
    2 Buy, 8 Hold, 7 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 24 | Down: 28 | New: 14
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This morning DreamWorks (NYSE: DWA) stock traded lower on reports it will implement cost cutting in preparation for a reduced film slate. Analysts at Janney Capital think the savings could allow SG&A to drop down to roughly $30 million per quarter starting in 2Q13, which is roughly in line with SG&A levels prior to the Classic Media acquisition. To account for this, analysts increased FY13 EPS estimates to $0.46 but trimmed FY14 EPS by $0.02 to $1.09.

"Although the company still faces headwinds tied to merchandise sales, franchise fatigue, lower DVD sales, and FX headwinds, we see an earnings inflection point in 2014," said analyst Tony Wible.

Going forward, he sees DWA benefiting from a long list of potential positives, including a broader film slate, negative cost savings, domestic TV fee savings, a possible TV network, better international film performance, and strategic benefits tied to the News Corp. (Nasdaq: NWSA) relationship, the acquisition of Classic Media, and the Oriental DreamWorks (ODW) partnership.

Janney Capital has a Buy rating on DreamWorks Animation with a price target of $22.00.

For an analyst ratings summary and ratings history on DreamWorks Animation (NASDAQ: DWA) click here. For more ratings news on DreamWorks Animation click here.

Shares of DreamWorks Animation closed at $17.42 yesterday.


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