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DreamWorks Animation Stock Slides following ‘Penguins’ Debut

Wall Street analysts predict further losses for DreamWorks Animation following the North American debut of the studio’s ‘Madagascar’ spinoff.

Wall Street analysts are predicting further losses for DreamWorks Animation following the North American debut of Penguins of Madagascar, according to a report by The Hollywood Reporter.

In a research note issued late Sunday, Stifel, Nicolaus analyst Benjamin Mogil noted that Penguins opened its North American run to a five-day box-office take of $36 million, “well below our estimate and consensus.” His North American box-office estimate for the five-day weekend had been for $50 million to $55 million, and he now expects the studio to book a loss of $14 million on the film in the fourth quarter.

Penguins had only a slightly better debut than that of the studio’s 2012 release, Rise of the Guardians, which eventually forced a write-down of $87 million. The studio took similar write-downs on 2013’s Turbo and this year’s Mr. Peabody & Sherman. To date Penguins of Madagascar has grossed $63 million internationally, but those numbers include China, where Penguins saw an $11.4 million debut and has already racked up $24 million.

Mogil also revised downward his DVD/VOD estimates for the title, writing that “We now expect the title to sell 3.5 million net units (had been 4.7 million) and VOD to generate $11 million of revenue (had been $15 million).”

Early Monday, Sterne Agee analyst Vasily Karasyov said Penguins was “on track to generate ultimate domestic box office of $105 million, significantly below our and the Street’s expectations prior to the film’s release, which were $200 million and $175 million, respectively.”

Janney Montgomery Scott analyst Tony Wible said that Penguins has a “long favorable release window” and was likely to have “a larger than average ultimate-to-open ratio.” But he also warned: “The weaker results increase risk of another impairment and continue to dilute the momentum DWA is gaining in its non-film business. We are maintaining our estimates until we get a better sense for how the post-release tail will develop, but we believe [Wall] Street numbers will need to come down.”

B. Riley analyst Eric Wold said the box-office trends also could be a negative in attempts to possibly find a buyer for DWA. Wold maintained his “neutral” rating on the stock and his price target of $25.

Morgan Stanley analyst Benjamin Swinburne was more bullish than others with his report: “Penguins Off to a Slow Start, But Likely Still Profitable.”

DreamWorks Animation's stock on Friday closed at $23.84 and was down 4.6 percent in early Monday pre-market trading at $22.75 and down 6 percent as of 10:15 a.m. ET.

Jennifer Wolfe's picture

Formerly Editor-in-Chief of Animation World Network, Jennifer Wolfe has worked in the Media & Entertainment industry as a writer and PR professional since 2003.