DreamWorks (NASDAQ: DWA) has not been looking so good for investors lately, and its abysmal opening weekend of ‘Penguins of Madagascar’ did not make matters any better.
The latest sequel of the Madagascar franchise brought in a mere $36 million in domestic box office revenue over the five-day holiday weekend. As a result, shares of DreamWorks dropped 8% in trading on Monday morning.
Since the end of its ‘Shrek’ franchise, DreamWorks has been struggling to keep up with huge competitors like Walt Disney’s Pixar and Universal Studios' ‘Despicable Me’ franchise. In fact, DreamWorks shares have plunged 38% to $22 so far this year.
However, DreamWorks has several films slated through 2016, including “Kung Fu Panda 3” next year that the entertainment company hopes will mark a positive turnaround.
A Financial Expert’s Opinion
In a research note on December 1st, FBR Capital analyst Barton Crockett downgraded his rating for DreamWorks from Perform to Underperform and slashed his price target from $20 to $14.LVNTA,
Prior to the ‘Penguins of Madagascar’s’ opening weekend, Crockett had forecasted that the film would rake in $66 million in domestic box office revenue. His downgrade stems from the fact that the film brought in half what he had expected.
Crockett noted, “The [box office] miss highlights issues that we see weighing on DWA stock: rising competition—especially from Disney—and DreamWorks’ difficulty in sustaining momentum in its post-Shrek franchises. A more skeptical stance on these issues accompanies an estimate reduction from the Penguins miss.”
Crockett also slashed his total U.S. box office forecast for the film by $80 million to $116 million, $100 million less than the $216 million that “Madagascar 3: Europe’s Most Wanted” grossed in 2012.
Crockett has rated DreamWorks 5 times, earning a +31.9% average return per recommendation.
Barton Crockett’s Past Recommendations
Crockett has experience in rating stocks in the entertainment industry such as 21st Century Fox (NASDAQ: FOXA) and Netflix (NASDAQ: NFLX). Past recommendations have helped him earn a 69% overall success rate recommending stocks and a +10.3% average return per recommendation.
The analyst last rated 21st Century Fox with a Buy on October 31st of this year when the stock was worth $34.35 a share. Since then, the stock price has risen to $37.28. Crockett has rated the stock 4 times with a 75% success rate.
Similarly, Crockett last gave a Buy rating on Netflix on April 26th of this year. Since then, the stock price has gone up from $215.55 to $341.81. The analyst has rated Netflix 17 times with a 75% success rate.
However, Crockett has not always seen such positive results from his recommendations. The analyst has rated Liberty Interactive Ventures (NASDAQ: LVNTA) 12 timessince November of 2013 with only an 18% success rate.
Conclusion
DreamWorks is seeing the negative backlash from the less than impressive opening weekend of its latest film with Crockett remaining bearish. Do you trust his latest recommendation based on his financial advice history?
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