B. Riley Securities has opened coverage of Lionsgate Studios with a Neutral rating and a $17 price target, balancing optimism about the studio's content pipeline against concerns about its capital structure and a valuation that already reflects substantial near-term potential.
The research note highlights a robust theatrical performance and a deep franchise slate as central to expected revenue gains. The firm singled out the blockbuster film Michael, which has amassed approximately $960 million at the global box office and stands as Lionsgate's highest-grossing title to date. B. Riley also pointed to upcoming franchise-driven releases, including new installments in the Hunger Games franchise - specifically The Hunger Games: Sunrise on the Reaping - and John Wick: Chapter 5, which the brokerage expects to underpin studio revenue growth.
On the television side, B. Riley anticipates a recovery in the company’s production business in fiscal 2027. The brokerage noted that Lionsgate has renewals for 12 of its 13 scripted series, a dynamic it expects will nearly double episodic deliveries. That forecasted rebound, together with steady library revenue that has exceeded $1 billion on a trailing 12-month basis for three straight quarters, underpins the firm’s view that segment revenue should run roughly $1.4 billion to $1.5 billion annually over the coming years.
Industry conditions are also cited as supportive. B. Riley pointed to the U.S. box office tracking about 15% higher year-to-date in 2026 and on course for what the firm described as the strongest post-pandemic performance. The brokerage added that a higher cadence of film releases, extended theatrical windows and finalized labor agreements across Hollywood are expected to be positive for studio profitability.
Despite those positives, B. Riley emphasized constraints tied to Lionsgate’s balance sheet and recent stock price appreciation. Since the company separated from Starz Entertainment Corp., shares have climbed by more than 130%, a move the firm said has been fueled in part by takeover speculation and investor enthusiasm for the content slate. The brokerage calculated the stock is trading at roughly 17 times forward adjusted OIBDA, a multiple that, in its view, leaves limited room for additional upside from fundamentals alone.
The report detailed Lionsgate’s leverage metrics entering fiscal 2027: approximately $1.94 billion of debt and net leverage near 6.1 times EBITDA. While B. Riley expects that stronger free cash flow generation and planned debt reduction should gradually improve those leverage ratios over the next several years, the current debt load remains a key constraint on shareholder returns.
Finally, the brokerage noted that broader industry consolidation and Lionsgate’s large content library could sustain merger-and-acquisition speculation, a factor that may continue to provide episodic support for the stock’s price. Overall, B. Riley’s initiation frames a mix of substantive content-driven opportunity tempered by financial leverage and a stretched valuation.
Analyst takeaway - Lionsgate’s slate and TV rebound prospects create a pathway to meaningful earnings growth, but high net leverage and a sizeable post-separation share-price rally limit near-term upside, according to B. Riley.