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July 30, 2014
11:42 EDTDWADreamWorks falls after Q2 results miss, SEC probe disclosed
Shares of animated film-maker DreamWorks Animation (DWA) are tumbling after the company reported worse than expected second quarter financial results and revealed that the SEC is investigating its 2013 writedown on the movie "Turbo." WHAT'S NEW: DreamWorks Animation experienced a Q2 earnings per share loss of (18c), while analysts were expecting a loss of (2c). The company's Q2 revenue was $122.3M, which was below analysts' consensus of $137.86M. WHAT'S NOTABLE: During the company's conference call, DreamWorks said the SEC is investigating its 2013 writedown on the movie "Turbo," but noted that it is cooperating with the probe. Looking ahead, the company says that the continued performance of "How to Train Your Dragon 2" at worldwide box offices is expected to be the primary driver of its Q3 results. Significant events for Q4 include the theatrical release of the "Penguins of Madagascar " on November 26, as well as its home video/home entertainment release of both "Mr. Peabody & Sherman" and "Dragon 2." The company called 2014 an "investment year," as it is aiming to continue investing "heavily" in each of its areas of growth and expects its spending to continue during the second half and into next year. Commenting on to its Television unit, DreamWorks says it remains on track to debut 3 new series in the second half of the year and 7 new series in 2015. The company continues to expect that its 2015 television revenue will exceed $250M and that its profit margin for this segment will approach 30% as it ramp up production and delivery. ANALYST OPINION: Piper Jaffray analyst James Marsh is maintaining his Neutral rating on the shares as he expects the stock to continue to trade "sideways" until better perspective on the company's diversification efforts become evident. Marsh said he expects DreamWorks' investment spending and the SEC probe into the company's "Turbo" writedown will pressure shares. He said that he isn't certain about the nature of the investigation beyond the few remarks from management on the company's call, but based on what he knows at the moment, Marsh said that he doesn't see any big issues stemming from the probe. PRICE ACTION: During late-morning trading, shares of DreamWorks fell $3.15, or 14%, to $19.51.
News For DWA From The Last 14 Days
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March 30, 2015
10:37 EDTDWADreamWorks jumps after 'Home' beats expectations in opening weekend
The shares of film maker DreamWorks (DWA) are climbing sharply after the company's animated movie "Home" generated significantly more revenue than expected in its opening weekend in the U.S. WHAT'S NEW: "Home" took in $54M of revenue at the domestic box office this weekend. The $54M take was well above's estimate of $31M ahead of the weekend. WHAT'S NOTABLE: In a note to investors earlier today, Piper Jaffray analyst James Marsh wrote that the movie had outperformed Wall Street expectations and may enable the company to launch a new multi-film franchise. The overall performance of "Home" will probably exceed expectations and the film is likely to generate $30M-$50M of profits for DreamWorks, Marsh predicted. More importantly, the film's success contradicts the bears' argument that the company has lost its ability to make good films and may ease concerns about the film maker's balance sheet, according to the analyst. He kept a $26 price target and Overweight rating on the shares. REASONS FOR SUCCESS: Writing yesterday that the movie "looks like a smash hit," Forbes columnist Scott Mendelson attributed the film's success both to its very famous cast, which included Rihanna, Jim Parsons and Steve Martin, and the uniqueness of choosing a young black female as the star of an animated move. According to Marsh, more targeted social media marketing and the strong marketing capabilities of Rihanna and Jennifer Lopez, who also played a character in the film, were the keys to the movie's initial success. BEARISH TAKE: Not everyone was optimistic about the overall outlook for "Home," as research firm B. Riley still believes there is a 75% chance that DreamWorks will have to take a write-off on the movie. That firm kept a Neutral rating on the stock. PRICE ACTION: In early trading, DreamWorks jumped 8.5% to $24.60.
08:44 EDTDWADreamWorks valuation still not supported by movies, says FBR Capital
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05:58 EDTDWADreamWorks write-off risk still 75% despite strong opening, says B. Riley
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05:49 EDTDWADreamWorks to build franchise around 'Home,' says Piper Jaffray
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March 29, 2015
19:57 EDTDWADreamWorks' 'Home' leads at weekend box office with $54M
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March 27, 2015
14:29 EDTDWAFly Watch: DreamWorks' lone 2015 feature opens this weekend
DreamWorks' (DWA) sole feature film slated for release in 2015, "Home," is set to debut this weekend. The animated movie, narrated by Jim Parsons, Rihanna and Steve Martin, details an alien race's search for a new home planet. "Home" is expected to take in $31M during its opening weekend, according to ANALYST VIEW: The film should do well enough at the box office to avoid a significant write-down, Piper Jaffray analyst James Marsh wrote earlier this week in a note titled "'Home' Need Not Be a Home Run, Just Not A Whiff." Earlier this year DreamWorks took a $57M write-down on "Penguins of Madagascar," and it took a $13.5M write-down on its "Turbo" film in 2014. Last weekend, "Home" was released in a number of small foreign markets, and the results in the U.K. were favorable, as it generated the most revenue among films opening in Britain, Marsh reported. The analyst had an upbeat take on the quality of the movie, saying that its characters are likable and that it was enjoyable overall, although it "was a bit sappy." Estimating that "Home" will generate $350M in global sales, or slightly more than consensus expectations, Marsh wrote that the movie should be a significant positive catalyst for the stock. The film's performance should be sufficient to shift investors' focus to DreamWorks' upcoming positive catalysts that are more likely to boost the stock, including its improved 2016 film slate, its enhanced consumer products business, and its increasingly strong TV business, the analyst stated. He kept a $26 price target and Overweight rating on the stock. WHAT'S NOTABLE: Research firm B. Riley was less optimistic about the outlook for "Home" earlier this month. In a note to investors on March 13, B. Riley downgraded the stock to Neutral from Buy, based on valuation and its belief that the company may have to take a write-down on "Home." The firm kept a $24 price target on the shares. PRICE ACTION: Shares of DreamWorks are up 4c to $22.06 in Friday afternoon trading.
11:21 EDTDWADreamWorks Animation volatility low into 'Home' opening
DreamWorks Animation April weekly call option implied volatility is at 45, April is at 42, May is at 52, June is at 44; compared to its 26-week average of 49 according to Track Data, suggesting decreasing price movement into 'Home' opening.
March 25, 2015
05:37 EDTDWADreamWorks film expected to be material positive catalyst at Piper Jaffray
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March 24, 2015
08:42 EDTDWADreamWorks 'Home' opens to $19.2M in international markets, NY Post says
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