Update (9:40 a.m.): Updated with Wednesday market open information.
NEW YORK (TheStreet) -- Piper Jaffray downgraded Dreamworks Animation (DWA - Get Report) to "underweight" from "neutral" and set a $19 target price. The firm noted the company offered lower slate expectations.
The stock was falling 12.59% to $30.77 shortly after the market opened on Wednesday.
Separately, TheStreet Ratings team rates DREAMWORKS ANIMATION INC as a "hold" with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate DREAMWORKS ANIMATION INC (DWA) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Compared to its closing price of one year ago, DWA's share price has jumped by 87.70%, exceeding the performance of the broader market during that same time frame. Although DWA had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
- DWA's debt-to-equity ratio is very low at 0.22 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
- 40.99% is the gross profit margin for DREAMWORKS ANIMATION INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 6.51% trails the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Media industry. The net income has significantly decreased by 58.8% when compared to the same quarter one year ago, falling from $24.44 million to $10.06 million.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Media industry and the overall market on the basis of return on equity, DREAMWORKS ANIMATION INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
- You can view the full analysis from the report here: DWA Ratings Report