The firm said it raised its rating on the animated film and entertainment studio as it believes DreamWorks will benefit from its shift in focus to younger viewers.
Stifel has a $34 price target on DreamWorks stock.
Based in Glendale, Calf. DreamWorks Animation is engaged in the development and production of animated films in the theatrical, home entertainment, digital, TV and other markets. Some of the company's films include the "How to Train Your Dragon" and "Shrek" franchises, "Kung Fu Panda" and "Home."
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 revenue growth, 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 a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- DWA's revenue growth has slightly outpaced the industry average of 3.8%. Since the same quarter one year prior, revenues rose by 13.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The current debt-to-equity ratio, 0.51, is low and is below the industry average, implying that there has been successful management of debt levels.
- 46.67% is the gross profit margin for DREAMWORKS ANIMATION INC which we consider to be strong. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -32.89% is in-line with the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Media industry average. The net income has significantly decreased by 27.6% when compared to the same quarter one year ago, falling from -$42.94 million to -$54.78 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Media industry and the overall market, DREAMWORKS ANIMATION INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: DWA Ratings Report