With ‘Hedge’ Low, Analyst Cuts DreamWorks Forecast

From Bloomberg News

DreamWorks Animation SKG Inc.'s full-year profit estimate was cut by one analyst Monday and may be lowered by another after the studio’s “Over the Hedge” film posted lower-than-expected weekend sales in U.S. and Canadian theaters.

Banc of America Securities analyst Michael Savner cut his 2006 forecast for the company to 34 cents a share from 47 cents and lowered his domestic box-office estimate to $148 million from $167 million. The film took in $38.5 million in weekend sales.

“Over the Hedge” is half of the company’s 2006 output. Glendale-based DreamWorks makes two films a year for theaters and home video. “Over the Hedge” faced competition from Sony Corp.'s “The Da Vinci Code,” which led with $77 million in sales during the weekend.

“DreamWorks took a calculated risk” going up against “The Da Vinci Code,” Savner wrote. “That premise appears to have been wrong.”


Savner also lowered his full-year sales estimate for DreamWorks to $327 million from $352 million and cut his home-video forecast to 21 million units from 25 million, the report said.

Shares of DreamWorks lost 38 cents to $26.34. They have risen 7.2% this year.

“Over the Hedge” will need to take in about $41 million during the Memorial Day weekend to meet the 57-cent profit estimate of Merrill Lynch analyst Jessica Reif Cohen, who is ranked the top media analyst by Institutional Investor magazine.

She might cut her 2006 profit estimate to less than 50 cents a share from 57 cents if next weekend’s sales did not hit her prediction, she wrote Monday.

DreamWorks spokesman Bob Feldman declined to comment.

Sales for “Over the Hedge” were less than the $40 million to $50 million predicted by some analysts, Goldman Sachs & Co.'s Anthony Noto said. He had predicted $37.5 million and did not alter his earnings forecast.