Why Lions Gate's Stocks Plummeted Today
On Wednesday, few investors were clapping for the performance of Lions Gate Entertainment (NYSE: LGF-A)(NYSE: LGF-B) stocks. The TV and film company saw the prices of both its listed shares tumble by around 15% on the day, after a prominent bank aggressively downgraded its recommendation on them.
JPMorgan Chase's Philip Cusick downshifted his recommendation on Lions Gate's stocks -- not one, but two pegs. From his previous estimation of overweight (i.e., buy), he now feels the pair rate an underweight (sell). Consequently, he has reduced his price target by 30% to $7 per share (formerly $10).
Currently in the midst of hiving off its Starz TV channel, Lions Gate isn't attractively positioned for the future, the analyst believes. He's particularly concerned with the current state of its finances -- its borrowings have increased considerably of late. As for the split, he doesn't feel that Starz is a compelling stand-alone asset.
Source Fool.com
