On Thursday, Lions Gate Entertainment Corp. (NYSE:LGF-B) experienced a reduction in its stock price target, now set at $15.00, decreased from the previous $20.00. The firm retained its Buy rating on the stock despite the adjustment. The reduction follows a disappointing opening for Lions Gate's "Borderlands" movie, which premiered last weekend and only garnered $8.6 million domestically against its $140 million production budget.
The underwhelming performance of "Borderlands" has led to a reassessment of the near-term profit and loss expectations for Lions Gate. The company's strategy to mitigate movie production risks by pre-selling international rights was challenged by the film's poor debut. This has prompted a more conservative stance in the sum-of-the-parts (SOTP) analysis and a downward revision of estimates.
Lions Gate's stock closed at $6.90 on Wednesday, marking a roughly 29% decline year-to-date, following an approximately 90% increase in 2023. Despite the current setbacks, the new price target suggests a continued positive outlook.
The firm believes that the intrinsic value of Lions Gate extends beyond the immediate successes or failures of its releases, citing the company's durable library and an ongoing sale process as factors that should contribute to its value.
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