TORONTO - As shares in Lionsgate hit a new 52-week high Wednesday, analysts raised their price target for stock in the mini-studio ahead of more releases of movie adaptations of popular YA book series like Ender's Game and Divergent.
David Miller, an analyst at B. Riley Caris, in a research report lifted his Lionsgate price target from $23.00 to $27.00 in an investors note that questioned why the upcoming release of Divergent was “flying below radar.”
“We believe neither the market, nor competing brokers, are factoring in the release of Divergent as a hit title, book sales of which, ironically, are ahead of where Hunger Games was as measured by time/trajectory,” Miller wrote in his report.
“We believe this could be a $500mm WW grosser and hence, are improving numbers accordingly,” he added.
Ben Mogil, an analyst at Stifel Nicolaus, raised his Lionsgate price target from $21.00 to $25.00, due in part to a better than expected pay-off on the releases for Ender's Games and Divergent, Summit/Lionsgate’s adaptation of Veronica Roth’s YA novel.
"Divergent is more similar to Hunger Games in that the company owns the underlying economics (i.e. production) and the budget (at $80mn) is more manageable,” Mogil wrote.
The Divergent novel, published in May 2011, is set in a future society that is divided into factions based on human traits.
Shares in Lionsgate were up sharply Wednesday afternoon on the New York Stock Exchange, trading up 3.5 percent, or 77 cents, to $23.06.