Despite Box Office Flops, Analysts Believe in Lionsgate

Despite box office flops for three major releases – Bangkok Dangerous, Disaster Movie and My Best Friend’s Girl – Lionsgate Entertainment Corp. (LGF) managed to shrink its third-quarter loss compared with a year ago.

RBC Capital markets analyst David Blank wrote in a note to clients this morning that since the company only wrote off about $1.6-million relating to the three films, it likely expects them to turn profitable over the course of their lifecycles.

Theatrical box office usually accounts for only a small portion of the revenue a film ultimately brings in from DVD and cable television sales.

BMO Capital Markets highlighted the firm’s free cash flow of $73-million in the quarter versus $23-million last year, although Lionsgate did lose C$0.41 a share.

Analyst Jeffrey Logsdon wrote:

We continue to believe [Lionsgate’s] assets are worth substantially more than its equity valuation, which should make it attractive to small-cap value investors.