"We view LGF as a derivative play on the secular growth in original content," Pacific Crest analysts said in a note this morning. "It does not possess U.S. cable or broadcast assets, which somewhat insulates it from secular headwinds in traditional media."
Analysts expect demand for original television programing to drive growth and offset volatility in the film segment.
"The shift to on-demand viewing is driving investment in original content higher, which is likely to benefit LGF," analysts noted.
About 31% of Lions Gate Entertainment's motion picture revenue is generated from movies that are more than two years old and from managed brand content.
"This revenue stream has high margins and is stable in comparison to other theatrical revenue," analysts added.
Shares of Lions Gate Entertainment are down 0.81% to $21.39 in early morning trading on Tuesday.
Separately, Lions Gate Entertainment has a "hold" rating and a letter grade of C at TheStreet Ratings because of the company's strengths, such as good cash flow from operations and expanding profit margins, and its weaknesses, including disappointing stock performance, deteriorating net income and generally higher debt management risk.
You can view the full analysis from the report here: LGF
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author.