'Lego Batman' Could Beat Opening Weekend Estimates

Wunderlich believes the opening weekend estimate of Time Warner Inc TWX movie "The LEGO Batman" is conservative, while the brokerage maintained its Buy rating on the shares ahead of the company’s February 8 earnings print.

Is The Estimate Conservative?

“We actually think the H$65.5 million opening estimate could be conservative, with tracking suggesting a possibility for an $80 million vicinity opening,” analyst Matthew Harrigan wrote in a note.

Harrigan kept his fourth-quarter estimates for Time Warner unchanged, calling for 10.3 percent gain in top line to $7.810 billion and 21.1 percent growth in adjusted operating income to $1.702 billion. This equates to $1.19 in adjusted EPS, in line with consensus.

In addition, the analyst expects sales increase of 7 percent to $2.846 billion for Turner segment, and sees global HBO sales up 4.6 percent to $1.477 billion.

Harrigan anticipates top line growth of 7 percent plus for HBO starting next year through 2020, benefiting from affiliate fee reworks that better monetize underpriced linear viewing.

Also, the analyst projects studio sales rise 15 percent to $3.801 billion, driven by the success of "Fantastic Beasts," with mid-size successes "The Accountant" and "Collateral Beauty."

Bottom Line: Staying At Buy

“We maintain a Buy rating on Time Warner moving into tomorrow's earnings, as risk to the AT&T Inc. T deal approval is cushioned by our assessment of fair public market value for TWX in the $100 vicinity,” Harrigan added.

Shares of Time Warner closed Monday’s trading at $96.36 versus Harrigan’s price target of $107.50.