Macquarie reiterated an Outperform rating and $31.00 price target on DreamWorks Animation (NASDAQ: DWA) after spending time with company management. TV is poised to grow revenue at a 19% 3-year CAGR through ‘18, with Macquarie modeling ’16 TV revenue at US$297m and gross margins of ~36%. Both of those estimates at the higher end of management’s guidance for US$275-300m and mid-30% margins.

Analyst Amy Yong commented, "We just got off the plane with IR executive Jennifer DiGrazia and what resonated with us are two budding franchises that make DreamWorks a standout among studios. Before the end of the decade, the following should comprise more than twothirds of revenue: 1) its multi-year output deals with Netflix and 10+ distributors; and 2) its 75% stake in burgeoning Gen Z platform AwesomenessTV. Its success will offset volatility in film and will force investors to rethink the business and assign a higher multiple to its high-growth, high-free cash flow steady business."

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Shares of DreamWorks Animation closed at $24.99 yesterday.