Goldman raises estimates and reiterates Buy on Dreamworks (DWA). 24% upside to $32 6-month price target. GS thinks Kung Fu Panda will blow away expectations. Concerns over weakness from Bee Movie and Shrek 3 were overblown:
We continue to expect strong 2008 results driven by the theatrical release of Kung Fu Panda on June 6 and the home video release to follow during the holiday season.
DWA reported better than expected 1Q2008 results with revenue, EBITDA, and EPS of $157 mn, $36 mn, and $0.28 vs. our estimates of $118 mn, $25 mn, and $0.19 and consensus of $126 mn, $30 mn, and $0.22. The outperformance was driven by better than expected home video sales of Bee Movie (4.8 mn WW units vs. our 2.9 mn estimate) and TV timing, offset slightly by lighter than expected Shrek 3 home video sales.
2008 EPS estimate inceases to $1.65 from $1.55. 2009 and 2010 EPS estimates remain at $1.73 and $1.61 respectively.
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