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Pro Analysis

Lions Gate's acquisition of Starz to propel shares 31 percent, Stifel predicts

Michael Burns, vice chairman of Lions Gate Entertainment Corp., left, and Jon Feltheimer, co-chairman and chief executive officer of Lions Gate.
Jonathan Alcorn | Bloomberg | Getty Images
Michael Burns, vice chairman of Lions Gate Entertainment Corp., left, and Jon Feltheimer, co-chairman and chief executive officer of Lions Gate.

Shares of Lions Gate were upgraded to buy from hold by Stifel on Friday, citing the proposed merger with Starz as a catalyst to propel the stock up more than 30 percent in the next 12 months.

The investment house also gave its predictions on future M&A in the media and entertainment space, including a potential bid for Epix by Lions Gate.

"Starz is the likely engine that pulls the LGF train," wrote equity analyst Benjamin Mogil in reference to a $4.4 billion deal between Lions Gate and Starz announced in June.

"With Starz contributing 70 percent of consolidated post-merger EBITDA [earnings before interest, taxes, depreciation and amortization], what we view to be continued improvement in Starz's fundamentals pulling through the entire entity despite what continues to be a weak slate at Lions Gate," he said.