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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, chief executive officer of Lions Gate.
Jonathan Alcorn | Bloomberg | Getty Images

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.