Pixar Shares Seen Fully Valued
04.04.05, 12:42 PM ET
Tear Sheet | Chart | News
Credit Suisse First Boston said shares of Pixar Animation Studios (nasdaq: PIXR - news - people ) appear "pricey" after gaining 6.4% last week amid speculation that a new boss at Disney may lead to revived talks for a distribution deal. "We still believe that the chance of a new distribution/production agreement with Disney is close to nil, given the difference in economic expectations and splits," said CSFB. "The stock has disengaged from fundamentals, in our opinion, and we believe the stock is now fully valued. Our fundamental view on the stock has not changed, Pixar has a strong foothold in the computer animation genre and the company likely continues to beat estimates." CSFB said the current price of Pixar's stock is embedding long-term profit growth of 9.8%, "which is likely not sustainable at the current run rate of one film per year/18 months," adding that it sees long-term growth of 7% as achievable. The research firm also attributed the recent advance in Pixar shares to "buzz" regarding a secondary stock offering by rival DreamWorks Animation SKG (nyse: DWA - news - people ). "The secondary is set for late May after the release of Madagascar," it said. "The buzz around the offering drove DreamWorks up 2.3% last week, brining its year-to-date performance up to 7.8% year to date. The multiples are unsustainable, in our opinion." The Walt Disney Co. (nyse: DIS - news - people ), rated at "outperform" with a $40 target price, is CSFB's top pick in its media/entertainment coverage. Also rated at "outperform" are News Corp. (nyse: NWS - news - people ), Viacom (nyse: VIAb - news - people ) and Time Warner (nyse: TWX - news - people ).
04.04.05, 12:42 PM ET
Tear Sheet | Chart | News
Credit Suisse First Boston said shares of Pixar Animation Studios (nasdaq: PIXR - news - people ) appear "pricey" after gaining 6.4% last week amid speculation that a new boss at Disney may lead to revived talks for a distribution deal. "We still believe that the chance of a new distribution/production agreement with Disney is close to nil, given the difference in economic expectations and splits," said CSFB. "The stock has disengaged from fundamentals, in our opinion, and we believe the stock is now fully valued. Our fundamental view on the stock has not changed, Pixar has a strong foothold in the computer animation genre and the company likely continues to beat estimates." CSFB said the current price of Pixar's stock is embedding long-term profit growth of 9.8%, "which is likely not sustainable at the current run rate of one film per year/18 months," adding that it sees long-term growth of 7% as achievable. The research firm also attributed the recent advance in Pixar shares to "buzz" regarding a secondary stock offering by rival DreamWorks Animation SKG (nyse: DWA - news - people ). "The secondary is set for late May after the release of Madagascar," it said. "The buzz around the offering drove DreamWorks up 2.3% last week, brining its year-to-date performance up to 7.8% year to date. The multiples are unsustainable, in our opinion." The Walt Disney Co. (nyse: DIS - news - people ), rated at "outperform" with a $40 target price, is CSFB's top pick in its media/entertainment coverage. Also rated at "outperform" are News Corp. (nyse: NWS - news - people ), Viacom (nyse: VIAb - news - people ) and Time Warner (nyse: TWX - news - people ).
