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Investing.com - Wells Fargo (NYSE:WFC) initiated coverage on Lionsgate Studios Corp (NASDAQ:LION) with an Overweight rating and a $9.00 price target, representing a potential 50% upside from the current price of $5.99. According to InvestingPro data, analyst targets range from $8.00 to $10.71.
The investment bank views Lionsgate as an attractive pure-play studio asset that should benefit from industry mergers and acquisitions as strategic buyers look to strengthen their content intellectual property portfolios. InvestingPro analysis shows the company operates with significant debt, with a total debt of $4.8 billion and a concerning current ratio of 0.36.
Wells Fargo also cited an improving fiscal 2027 slate as a catalyst for the entertainment company, noting that while the risk/reward setup has some challenges, its bull case reaches $13 per share.
The firm does not expect adjusted operating income before depreciation and amortization (AOIBDA) to accelerate in the near term due to a softer fiscal 2026 slate.
Wells Fargo anticipates an enterprise value to EBITDA valuation floor in the 11-13x range given increased buyer interest, with M&A activity expected to pick up into fiscal 2027 and potential for the multiple to re-rate with upside to mid-teens levels.
In other recent news, Lionsgate Studios reported mixed developments. The company faced a challenging fiscal year, with the film "Ballerina" opening to a $25 million domestic box office, falling short of earlier projections. Despite this, Raymond (NSE:RYMD) James maintained an Outperform rating with a $10.00 price target, citing Lionsgate’s unique position as a standalone public film and TV studio. Benchmark initiated coverage on Lionsgate with a Buy rating and an $8.50 price target, highlighting the studio’s strong intellectual property portfolio, including franchises like "Hunger Games" and "John Wick." Meanwhile, Loop Capital gave a Hold rating with an $8.00 price target, pointing to Lionsgate’s vast film and TV library and its nearly $1 billion in annual revenue. The analysts noted that Lionsgate’s management is focusing on business growth rather than pursuing acquisition opportunities. Despite the box office challenges, Raymond James sees the current stock price as an attractive entry point for investors. These recent developments reflect a complex landscape for Lionsgate as it navigates industry challenges and opportunities.
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