Ahead of the Bell: DreamWorks upgraded

AP News
Posted: Dec 02, 2009 9:12 AM

DreamWorks Animation SKG Inc. should get a boost next year from the film "How to Train Your Dragon," a Janney Montgomery Scott analyst said Wednesday as he upgraded the company's stock.

In a note to clients, Janney analyst Tony Wible upgraded the company to "Buy" from "Neutral."

Wible said after a screening of "How to Train Your Dragon," he believes "the film is shaping up to be a major hit with a strong marketing campaign, merchandise opportunities, and franchise value."

The movie comes out next year in 3-D. Wible said DreamWorks plans to market the film heavily during the winter Olympics, online and with an iPhone application.

He estimates DreamWorks films make an average of 3 percent to 8 percent of their revenue with merchandise, but said "How to Train Your Dragon" should do better with its dragon and Viking characters.

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Given the greater earnings potential, Wible pushed his price target for DreamWorks shares up to $45 from $37.50.