Key Takeaways:
- Lionsgate stock surged 18% in the week ending May 26 after strong Q4 results
- The Michael Jackson biopic is on track to become Lionsgate's first billion-dollar film
- Wells Fargo reiterated an Overweight rating with a $16 price target
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Lionsgate Studios surges 18% in a week after earnings beat and Michael milestone
Lionsgate Studios Corp. reported fiscal fourth-quarter adjusted earnings of $0.37 per share, beating the $0.24 consensus by 54% and surging from $0.21 a year earlier.
"The results validate our strategy of building a standalone studio with a powerful content library," Chief Executive Officer Jon Feltheimer said. "Our library has achieved $1 billion in trailing 12-month revenue for three quarters in a row."
Revenue reached $906 million, topping the $809 million projection from Zacks Investment Research. Adjusted OIBDA hit a 12-year high of $165 million, up 17% year over year, while operating income jumped more than 50%. Free cash flow for the quarter was $190 million, and the company ended the fiscal year with leverage down more than a full turn to 6.1 times.
The film division drove the outperformance, with segment revenue of $651.9 million, up 23% year over year, and segment profit of $187.1 million, up 39%. "The Housemaid" grossed nearly $400 million worldwide, while the Michael Jackson biopic "Michael" is on track to surpass $1 billion at the global box office — which would be Lionsgate's first-ever billion-dollar film. Japan has not yet opened, and a sequel is already in development.
Wells Fargo analyst Omar Mejias reaffirmed his Overweight rating and $16 price target, calling Lionsgate's "earnings power inflecting after a trough year." He cited a loaded film slate including "Hunger Games: Sunrise on Reaping," "The Housemaid 2" and Mel Gibson's two-part "Resurrection of the Christ" series extending through fiscal 2028. The television business is set to nearly double episodic deliveries in fiscal 2027, with 12 of 13 scripted series renewed.
The guidance raise signals management expects continued momentum from the content pipeline and library monetization. Investors will watch for further updates on the "Michael" international rollout and the company's strategic options following the expiration of its poison pill in May.
This article is for informational purposes only and does not constitute investment advice.
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