The firm said it initiated coverage on the TV and film company based on its view that the studio behind the "Hunger Games" films is an "attractive pure play on the LT value of premium content across platforms."
"Moreover, the company's risk mitigation strategy provides downside protection in an inherently volatile business," Jefferies said in an analyst note.
The firm is estimating that Lions Gate will generate 8% EBITDA growth and 11% EPS growth over the next three years, "well ahead of peers," Jefferies added.
Shares of Lions Gate closed at $32.10 on Tuesday afternoon.
Separately, TheStreet Ratings team rates LIONS GATE ENTERTAINMENT CP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate LIONS GATE ENTERTAINMENT CP (LGF) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its increase in net income, good cash flow from operations, solid stock price performance, growth in earnings per share and expanding profit margins. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Media industry average. The net income increased by 10.6% when compared to the same quarter one year prior, going from $88.76 million to $98.19 million.
- Net operating cash flow has increased to $44.90 million or 27.31% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 15.01%.
- The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- LIONS GATE ENTERTAINMENT CP has improved earnings per share by 10.2% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, LIONS GATE ENTERTAINMENT CP reported lower earnings of $1.02 versus $1.57 in the prior year. This year, the market expects an improvement in earnings ($1.45 versus $1.02).
- 46.68% is the gross profit margin for LIONS GATE ENTERTAINMENT CP which we consider to be strong. Regardless of LGF's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, LGF's net profit margin of 13.06% compares favorably to the industry average.
- You can view the full analysis from the report here: LGF Ratings Report