Easy Math To Confirm Your Lion's Gate Price Target

| About: Lions Gate (LGF)

Sometimes, the media provides investors with an easy opportunity to triangulate and confirm their price target.

In a Reuters article this morning, Carl Icahn was interviewed about his previous investment in Lion's Gate Films (NYSE:LGF). Having sold at $7, Icahn stated that his organization couldn't see it going much higher at the time. Considering the size and prowess on Icahn's research team, investors can assume their math was close to the mark ("at the time" being the operative phrase).

He went on to deduce that investors are valuing the Hunger Games franchise at $1.5 billion (based on a $14 LGF share price).

The article went on to quote a Piper Jaffray analyst who stated that Hunger Games is now likely to hit $300 million, justifying a $2 billion franchise valuation.

From there, investor's can do some simple math. If the current value of a $1.5 billion franchise is $7.00 (per Icahn), then the current value of a $2 billion franchise (per Piper Jaffray) is $9.33. Add that to the original $7.00 and we derive a current valuation of $16.33 for LGF (about 17% over current levels).

Of course, how well the movie is received will be critical. However, armed with the aforementioned numbers, investors can monitor the direction their shares of LGF are likely to go next.

Disclosure: I am long LGF.