Dreamworks Animation (DWA) shares are trading sharply lower after a disappointing opening weekend for Shrek Forever After.
Pacific Crest analyst Evan Wilson this morning downgraded DWA shares to Sector Perform from Outperform on the weak results. He points out in a research note that the movie took in only $71.3 million in domestic box office receipts, well below his forecast of $115 million. “With receipts so low, it is pretty easy to see that everything – quality, aging franchise, etc. – went wrong,” he writes.
Wilson notes that unlike How To Train Your Dragon, which opened soft but then picked up steam on solid reviews and little competition, Shrek had mixed reviews, and is running smack into the June 18 release of Disney/Pixar’s Toy Story 3.
Wilson chopped his 2010 EPS forecast for the company to $1.95, from $2.67. He sees 2011 profits slipping to $1.85. Consensus estimates previously were $2.48 for this year and $2.54 for next year.
- Stifel Nicolas analyst Drew Crum repeats his Hold rating on the shares, but trims his 2010 estimate to $2.27, from $2.44. He had been expecting weekend box office receipts of $100 million, and notes that in 2007 the third Shrek movie took in $122 million in the first weekend.
- William Blair analyst Ralph Schackart maintains his Outperform rating, but cut his 2010 estimate to $1.88, from $2.43.
- Wedbush analyst Michael Pachter repeated his Neutral rating, and notes he had expected $120 million in ticket sales for the first weekend. He notes that the performance was particularly disappointing given that the movie played in a record number of 3D-equipped theaters – about 54% of the total screens showing the film.
DWA is down $3.46, or 9.9%, to $31.41.
So…are people getting tired of Shrek…or is the magic of 3D wearing off?
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