Star Wars $2B gross to boost Disney: Analyst

Published Mon, Aug 3 20152:38 PM EDTUpdated Mon, Aug 3 20152:52 PM EDT

Evelyn Cheng @in/evelyn-cheng-53b23624 @chengevelyn

The first film in a new Star Wars trilogy could give shares of Disney a significant boost, Wall Street investment bank Stifel Nicolaus said on Monday. The movie will highlight two big forces in the movie industry right now, said Stifel analyst Benjamin E. Mogil, who raised his price target on Disney to $130 a share, an upside of more than 7 percent on the stock from here. The two tailwinds, Mogil said, are increases in the number of IMAX and 3D screens in the United States and significant screen and box office growth overseas, particularly in China. Stifel expects $2.2 billion in global box office revenue from the film "Star Wars: Episode VII The Force Awakens," which opens on Dec. 18 in the United States. About one-fifth of that global revenue could come from China, Mogil said. Based on the mid-December releases of the two "Hobbit" films, Stifel noted that the China release for Star Wars may likely come closer to Chinese New Year, which falls on Feb. 8 in 2016. Domestic box office revenue fell 2 percent between 2009 and 2014 even with an increase in ticket prices. On the other hand, international markets saw exponential increases, with 427 percent box office growth in China, 76 percent in Latin America and 70 percent in Russia, the report said, citing industry data. To be sure, that heavy reliance on international markets makes the strong dollar a major challenge for Disney . "The biggest headwind will be foreign exchange. In all markets, except China, the exchange rates are more adverse than when the previous top-grossing film aired in the market," Mogil said in the note. He pointed out that since "Avatar," the euro has fallen 24 percent and the Russian ruble has fallen 48 percent. The Brazilian real is 44 percent lower since "Avengers" came out, the note said. Read More Where Star Wars makes the big bucks: Not in theaters Dependence on global releases that generally come months after the U.S. release also mean shares of Disney are set for a longer-term rise rather than a spike. A Kensho study showed that on more than 20 occasions, Disney had more than twice the return of the S & P 500 two months after a major-film release, with a median return of 4.46 percent versus the index's 1.85 percent. On the other hand, the S & P 500 outperformed the stock one month following a Disney film release, with the S & P posting a median return of 1.7 percent and the entertainment company 1.08 percent. Disclosure: NBCUniversal, parent of CNBC, is a minority investor in Kensho.

An image from "Star Wars: Episode VII The Force Awakens"

Source: Star Wars

The first film in a new Star Wars trilogy could give shares of Disney a significant boost, Wall Street investment bank Stifel Nicolaus said on Monday.

The movie will highlight two big forces in the movie industry right now, said Stifel analyst Benjamin E. Mogil, who raised his price target on Disney to $130 a share, an upside of more than 7 percent on the stock from here.