Wedbush Cuts Price Target on DreamWorks (DWA), Notes Weakness in Box Office and DVD Markets

Wedbush is reiterating its Neutral rating on shares of DreamWorks Animation (NASDAQ: DWA) as the price of shares have fallen from $18.57 at the end fo November to $16.75 today, almost a 10 percent decline. The firm reduced its target from $20.50 to $17.50.

For Q4, the firm is lowering its estimates due to weakness in the DVD market and lower box office estimates. For the quarter, the firm cut its EPS and sales estimates from $0.59 and $257 million to $0.41 and $230 million. Wedbush also lowered its FY11 EPS and sales estimates to $1.15 and $717 million to go inline with its new model.

Looking ahead to fiscal 2012, the firm is cutting its EPS estimate from $1.55 to $1.35 due to higher SG&A and distribution expenses for Madagascar 3 and Rise of the Guardians. Wedbush is maintaining its total sales estimate for the year of $675 million.

An analyst at Wedbush comments, "Due to uneven film results, an inconsistent release schedule that fluctuates between two and three films per year, and an increasingly weak DVD market, we are unprepared to recommend DreamWorks Animation shares at this time. Given the company’s limited number of releases, a weak performance by one of its films domestically or internationally can have a dramatic impact on financial results."

For an analyst ratings summary and ratings history on DreamWorks Animation click here. For more ratings news on DreamWorks Animation click here.

Shares of DreamWorks Animation closed at $16.99 yesterday.

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