Analyst calls the film "one of the most disappointing releases in the company's history" as the stock nears a 52-week low.
The stock of DreamWorks Animation sunk five percent on Monday, following the opening weekend for its latest release, Rise of the Guardians.
By the end of trading on Monday, according to a report by The Hollywood Reporter, DWA stock had fallen 94 cents to $17.11, giving the company a market value of $1.44 billion.
In the past year, the stock has traded from $16.35, a 52-week low set in January, and $22.98, a level reached this month.
Rise of the Guardians garnered just a $32.6 million debut, well shy of several estimates. Janney Montgomery Scott analyst Tony Wible, for example, predicted $55 million and the Hollywood Stock Exchange predicted $64.5 million.
In a note to clients Monday, Wible called the film's performance "one of the most disappointing releases in the company's history -- especially in light of the long weekend, record-breaking U.S. box-office gross over the weekend, the holiday-focused plot and lack of competition."
Wible added: "While we believe the film will have a longer-than-average tail, near-term numbers need to drastically come down, and the stock will face worse than typical post-release pressure."
The analyst reduced his fair-value estimate on the stock from $24.50 to $22 but maintained his "buy" rating. "This could create a good buying opportunity," Wible wrote, "as we still see a forthcoming inflection in earnings power that is not tied to this film, but rather a string of new unrelated growth opportunities -- News Corp. [distribution] deal, Netflix savings, Classic Media, TV network and China."
Susquehanna analyst Vasily Karasyov warned that Guardians is on pace to hit $95 million domestically, which would mark only the third time since 2001 DWA made a film that did not cross the $100 million threshold, the other two being Flushed Away and Wallace and Gromit: The Curse of the Were-Rabbit.
"We will now be watching international performance, which can pull the title out of the write-down territory," Karasyov wrote in a research note Monday. "We estimate at this point that in order to avoid a write-down, international box office should be at least $235 million."
Stifel, Nicolaus analyst Benjamin Mogil reduced his financial estimates for the animation studio after Guardians' weaker-than-expected domestic opening. "We see the next two weeks as critical for the title's performance as it enters the key international markets while domestic performance will indicate how strong word-of-mouth for the title is," he said. "Based on the current domestic trends, we see a loss for the title as likely."
He maintained his "hold" rating on the stock and reduced his U.S. box-office revenue estimate for the film to $125 million from $145 million.
Lazard Capital Markets analyst Barton Crockett said that "while Rise of the Guardians has opened in fewer than 10 territories internationally to date, early results suggest international will not compensate for the domestic shortfall." For example, he highlighted that In Russia, the biggest market so far, it generated $5.85 million during opening weekend, while Puss in Boots grossed $14.88 million, How to Train Your Dragon $7.28 million, and Megamind $6.94 million.
If international box office comes in as low as U.S. results compared with expectations, "we believe the movie could move from the $39 million profit [estimate] now in our DWA model to a $15 million loss," Crockett said.
Jennifer Wolfe is Director of News & Content at Animation World Network.