Investing.com -- Lionsgate Studios' strong film slate, improving television production outlook and a recovering box office environment position the company for meaningful earnings growth over the next several years, but its recent share-price rally and elevated leverage leave limited room for further upside, according to B. Riley Securities.

The brokerage initiated coverage of Lionsgate Studios Corp. with a Neutral rating and a $17 price target. Shares have surged more than 130% since the company's separation from Starz Entertainment Corp., aided by takeover speculation and optimism surrounding its content pipeline. B. Riley said the stock's valuation already reflects much of the near-term opportunity, trading at roughly 17 times forward adjusted OIBDA.

The firm highlighted the success of blockbuster titles, particularly Michael, which has generated about $960 million at the global box office and become Lionsgate's highest-grossing film ever. Analysts also pointed to a robust upcoming slate that includes new installments of major franchises such as The Hunger Games: Sunrise on the Reaping and John Wick: Chapter 5, alongside other franchise-driven projects expected to support revenue growth.

B. Riley expects Lionsgate's television production business to rebound in fiscal 2027, supported by renewals for 12 of its 13 scripted series, nearly doubling episodic deliveries and benefiting from stable library revenue that has exceeded $1 billion on a trailing 12-month basis for three consecutive quarters. The brokerage forecasts segment revenue of $1.4 billion to $1.5 billion annually over the coming years.

The report also cited improving industry fundamentals, with the U.S. box office tracking about 15% higher year-to-date in 2026 and on pace for its strongest post-pandemic performance. Increased film releases, longer theatrical windows and labor agreements across Hollywood are expected to further support studio profitability.

Despite the favorable outlook, B. Riley identified Lionsgate's balance sheet as a key constraint. The company entered fiscal 2027 with roughly $1.94 billion of debt and net leverage of 6.1 times EBITDA, though analysts expect debt reduction and stronger free cash flow generation to gradually improve leverage metrics over the next several years. The brokerage added that ongoing industry consolidation and Lionsgate's extensive content library could keep merger-and-acquisition speculation alive, providing support for the stock.