[Click eStock] "Studio Dragon, Earnings and Stock Price Have Bottomed Out... Investment Rating and Target Price Up"

Investment Rating Upgraded from 'Buy' to 'Neutral'
Target Price Raised from 46,000 KRW to 55,000 KRW

DB Financial Investment on the 8th upgraded its investment opinion on Studio Dragon from 'Hold' to 'Buy,' stating that both earnings and stock price have bottomed out, and raised the target price from 46,000 KRW to 55,000 KRW.

Shin Eun-jung, a researcher at DB Financial Investment, said, "Next year is expected to see a recovery to the performance level of 2023," adding, "The concretization of seven tentpole (highly promising) projects and eight pre-sold projects announced in this earnings report, along with the recently mentioned cost-efficiency strategy for Wednesday-Thursday dramas, has increased certainty in next year's lineup and earnings estimates, indicating that both earnings and stock price have bottomed out."

Studio Dragon recorded a loss in the third quarter this year. Its third-quarter sales were 90.3 billion KRW, down 58.5% year-on-year, and it posted an operating loss of 900 million KRW, turning to a deficit and falling short of consensus (average securities firm forecast). Researcher Shin analyzed, "The decline in the top line (sales) was larger than expected," explaining, "The number of aired episodes decreased by 16 to a total of 59 compared to the same period last year, resulting in poor performance, and sales shrank due to overseas sales failures of 'Player 2,' 'Thank You,' and 'Could It Be a Coincidence,' except for 'Perfect Son-in-Law.'" She added, "'The Queen of Tears' amortization costs were also a major factor in the profit decline."

Performance improvement is expected from next year. Researcher Shin said, "Although the number of aired episodes in the fourth quarter is expected to decrease to 43 compared to the previous year, the top line is expected to decline, but stable works such as 'Retirement,' 'Love on a Single Tree,' and 'Good or Bad Dong-jae' will be reflected in the results, so both the top line and profits are expected to increase compared to the third quarter, which was the bottom." She forecasted, "With one to two Wednesday-Thursday dramas on tvN, one to two Disney+ originals, two Japanese scheduled programs, and one KBS program, the number of projects is expected to increase by at least five to six compared to the previous year, so a full-scale recovery is expected from next year."

This content was produced with the assistance of AI translation services.