On Monday, Wolfe Research revised its rating on Lionsgate (NYSE:LGF-A) stock, moving from Underperform to Peer Perform. The adjustment follows a period where Lionsgate's stock traded below the firm's previous price target of $8. The analyst pointed out changes in strategy at Starz, a subsidiary of Lionsgate, which is now focusing more on managing content costs.
The firm also updated its future financial outlook for Lionsgate, increasing the forecast for fiscal year 2026's free cash flow per share by approximately $50 million to $1.18. Additionally, the analyst mentioned an implied Sum of the Parts (SOTP) valuation for Lionsgate, referred to as LION, of $10.3 per share.
This upgrade reflects a shift in Wolfe Research's perspective on Lionsgate's financial performance and market position. The analyst's commentary indicates an expectation of improved financial management within the company, particularly at Starz, which could potentially lead to better cost efficiency and stronger cash flows in the long term.
It is important to note that the new rating does not come with a specific price target. The absence of a price target suggests that while Wolfe Research sees improved prospects for Lionsgate, there may still be variables and market conditions that could affect the stock's future performance.
Investors and market watchers will likely monitor Lionsgate's progress, especially regarding its cash flow and the execution of its content cost management strategies at Starz, to see if the company's performance aligns with Wolfe Research's revised expectations.
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