DreamWorks Animation stock jumps

films like Shrek the Third and Flushed Away boost market value

Sep 27, 2006

DreamWorks Animation stock prices jumped by 4.5% after David W. Miller of Sanders Morris Harris Group Inc. called the company's stock price "too compelling to ignore."

DreamWorks Animation SKG's stock prices jumped by 4.5% yesterday after an analyst upgraded the stock's rating from "Hold" to "Buy."

The company's shares went up $1.10 to $25.32 per share on the New York Stock Exchange. DreamWorks' stock usually trades for $20.05 to $28.80 per share.

In a note to clients, David W. Miller of the Sanders Morris Harris Group Inc. called the current stock price "too compelling to ignore." He said DreamWorks stock could potentially hit $31.50 per share in the next 12 months - a 30% increase over Monday's closing price of $24.22.

Miller told his clients that upcoming releases like Flushed Away and Shrek the Third could increase DreamWorks Animation's earnings next year if both films hit their estimated box office targets, as well as on home video and DVD.

He also mentioned a more prominent broadcast and pay TV schedule over the next 18 months, as well as increasing clarity on some costs of Shrek the Third.

DreamWorks stocks declined sharply from their initial price of $28.50, after the company first went public in November of 2004. In December of that year, DreamWorks stock zoomed to an all-time high of $42.60. They've since dropped by 43%, and shares are currently down 16 percent from their 52-week high of $28.80.

David W. Miller also mentioned that the studio may plan to buy out principal owner Paul Allen, either directly or through a third-party investor.

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