Goldman Digs Into 'Star Wars' Box Office Data, And It's A Fun Ride

• Goldman Sachs has dramatically upped its box office estimates for the new Star Wars movie.
• The firm predicts that the movie will become the third highest-grossing film of all time.
• Goldman also upped its price target for Walt Disney Co DIS stock from $110 to $112.

The wait is finally over for one of the most highly-anticipated movies in recent history, "Star Wars: The Force Awakens." Possibly the only people more excited about opening weekend than Star Wars fans are Disney shareholders, and a new report by Goldman Sachs analyst Drew Borst provides some spoilers for Disney investors about just how much money the movie will rake in.

Upping estimates

In the report, Goldman has raised its box office estimates for "Star Wars: The Force Awakens" from $1.5 billion to $1.95 billion. That total is comprised of $750 million domestic box office and $1.2 billion international. Those numbers would put the movie in rare company behind only "Titanic" and "Avatar" as the third highest-grossing movie of all time.

"We estimate Star Wars domestic box office of $750 mn, on par with Avatar, even though Avatar’s domestic box office was in the premium-priced 3D format whereas we expect Star Wars to be closer to the 50% trend for recent action tentpoles," Borst explained.

Implications

According to Borst, every incremental $100 million in global box office sales translates to 2.0 cents (or 0.4 percent) in fiscal 2016 EPS for Disney.

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In addition to ticket sales, Goldman is forecasting $6 billion in Star Wars consumer product sales. Every $1 billion in product sales represents 1.6 cents (or 0.3 percent) in 2016 EPS for Disney.

Valuation

Along with the estimate changes, Goldman has boosted its target price for Neutral-rated Disney’s stock from $110 to $112. Goldman’s target is based on 18.5x 2016 EPS estimates.

Disclosure: the author holds no position in the stocks mentioned.