DreamWorks Animation stock drops after debut of ‘Puss in Boots’
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Shares of Glendale-based DreamWorks Animation dropped Monday after the company’s latest film, ‘Puss in Boots,’ opened this past weekend to softer-than-expected results.
DreamWorks Animation shares fell 8% on Monday as investors responded coolly to the box-office debut of ‘Puss in Boots,’ a spinoff of the studio’s hit ‘Shrek’ films that features the voices of Antonio Banderas and Salma Hayek.
With a production budget of about $130 million, ‘Puss in Boots’ generated $34.1 million at the box office over the weekend. Although it was No. 1 movie, ticket sales were well below the $40 million to $45 million that most Wall Street analysts had forecast.
‘This is the lowest opening weekend of any DWA CG animated feature since ‘Antz’ in 1998,’’ said Doug Creutz, an analyst with Cowen and Co., in a report to investors. ‘We believe the performance of ‘Puss’ is further evidence that increasing competition in the animated film space significantly degraded the domestic box office potential for individual animated films.’
In a research note titled ‘Hairball,’ Creutz revised his domestic box office estimate for ‘Puss in Boots’ from $154 million to $120 million but maintained his neutral rating on the stock.
Richard Greenfield, an analyst with BTIG Research, who has a ‘sell rating’ on the stock, said that wintry weather in the Northeast may have negatively effected the opening of ‘Puss in Boots,’ but wrote in a blog that the film’s opening weekend in the U.S. and Canada was ‘well below our and consensus expectations.’
Even if the film has some staying power, it ‘may have difficulty reaching our $157 million domestic box office estimate, which is well below consensus,’ said Greenfield.
DreamWorks Animation, which releases at least two films a year, remains a market leader in the industry but has been squeezed by an industry-wide slowdown in DVD sales and growing competition from other studios in the family film business.
In its most recent quarter, DreamWorks performed better than expected, although its profit fell 51%, which the studio attributed to the timing of its releases.
The company’s shares closed Monday at $18.56, down from the company’s 52-week high of $37.74 in November.
DreamWorks executives declined to comment on the investor reports, but cited the effect of storms in the Northeast and the World Series on Friday on the opening of ‘Puss in Boots’ and predicted the movie would build momentum.
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— Richard Verrier
