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Lions Gate Entertainment Corp. Message Board

  • realt101 realt101 Jan 18, 2013 1:48 PM Flag

    wunderlich $23 price nice

    23 sounds good to me

    Sentiment: Strong Buy

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    • Wunderlich Securities has decided to bump up its price target on buy-rated Lions Gate by 21%, to $23 a share, ahead of the fiscal third-quarter 2013 earnings report due out Feb. 11. Why?

      The short answer is that, much like Visa, there's more to Lions Gate than meets the eye -- or shows up on the income statement. Reviewing the company's cash flow statement, we quickly see that Lions Gate is a much more profitable operation than it appears, having generated $67 million in positive free cash flow over the past year, or more than nine times reported earnings.

      Even so, that leaves us here with a stock still valued at 36 times free cash flow, which is a bit pricey. Twenty-six percent long-term growth projections at Lions Gate are encouraging, but probably not enough to justify investing in the stock, Wunderlich's endorsement notwithstanding. Factor in the company's $1.4 billion debt load and its complete lack of a dividend, and the stock simply looks too expensive to roar ahead next month, no matter how good the earnings report winds up being.

      Sentiment: Strong Buy

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