NEW YORK (TheStreet) -- Shares of movie studio DreamWorks Animation (DWA) are tumbling after the company's "Penguins of Madagascar" film generated lower than expected revenue during its opening weekend in the U.S.
WHAT'S NEW: DreamWorks' "Penguins" movie had domestic box office receipts of about $36M from Wednesday to Sunday, according to multiple media reports. The box office grosses were well below the consensus outlook, according to research firm Stifel, which noted that it had predicted that the film's ticket sales for the five days would come in at $50M-$55M.
ANALYST REACTION: A number of analysts reacted negatively to the news. FBR Capital analyst Barton Crockett downgraded the stock to Underperform from Market Perform. The lower than expected domestic ticket sales highlight major problems the company is facing, such as increased competition and difficulty sustaining momentum in its films after its Shrek franchise ended, Crockett wrote. Although the film is doing well in China, DreamWorks gets a lower percentage of revenue from that market, while the movie is not doing as well as the previous films in the series in other overseas markets, Crockett added. The analyst slashed his price target on the name to $14 from $20. DreamWorks could report a loss on the movie for the fourth quarter, Stifel analyst Benjamin Mogil warned. That is likely to occur unless the film's overseas box office trends improve significantly from current levels, Mogil stated. He cut his domestic box office estimates for the film to $110M from $150M, but added that the movie had strong openings in Russia, Germany and Italy this weekend. However, the analyst now estimates that the company will generate a per share loss of (43c) for fiscal 2014, down from his previous estimate of a (19c) per share loss. Mogil kept a Hold rating on the shares.
PRICE ACTION: In morning trading, DreamWorks fell nearly 7% to $22.20. The shares hit a low of $21.63 earlier in trading.
Reporting by Larry Ramer.