UPDATE 3-'Iron Man' helps Marvel soar past Wall Street

Tue Aug 4, 2009 11:20am EDT

* Q2 EPS $0.37 beats estimates by 6 cents

* Q2 rev beats estimates

* Q2 publishing margins down

* Raises low end of full-year profit, sales forecasts

* Shares touch all-time high of $41.74 (Adds analyst comment, conference call details; updates share movement)

By S. John Tilak

BANGALORE, Aug 4 (Reuters) - Marvel Entertainment Inc MVL.N posted a quarterly profit that beat market estimates as it benefited from DVD and pay TV sales of its blockbuster self-produced movie "Iron Man," sending its shares to an all-time high.

The company, which released "Iron Man" and "The Incredible Hulk" in 2008, also raised the low end of its earnings outlook for the year.

"I think it's a good, solid, upside quarter," Wedbush Morgan Securities analyst Michael Pachter said. "There's nothing in there that's really a shock."

"Everybody knows the company has room to beat numbers and they're proving that each quarter."

Marvel beat profit estimates for the eighth straight quarter.

Second-quarter net income attributable to the company fell to $29.0 million, or 37 cents a share, from $46.7 million, or 59 cents a share, a year earlier. Revenue fell to $116.3 million. [ID:nWNBB8421] Analysts expected earnings of 31 cents a share, excluding exceptional items, on revenue of $106 million, according to Reuters Estimates.

However, second-quarter publishing margins were lower than last year, reflecting less-high-margin advertising income, Marvel said in a conference call with analysts.

Shares of Marvel pared some of their early gains to trade down 17 cents at $40.24.

Pay TV revenue from "Hulk" is expected in the second half of 2009, the company said.

Despite the two films last year, 2009 is a lull period for Marvel as it is not releasing any films of its own this year.

The strong results "portend very substantial operating results when the company has additional film and theatrical release with 'Iron Man 2,'" Hudson Square Research analyst Marla Backer said.

Marvel has completed principal photography for "Iron Man 2" -- scheduled for 2010 -- whose star-studded cast includes Robert Downey Jr, Scarlett Johansson, Gwyneth Paltrow, Samuel Jackson and Mickey Rourke.

DOES 2009 MATTER?

But given its outperformance in the first two quarters, people will question why it did not raise its outlook and not just narrow it, Backer said.

In the call, the company cited the state of the economy and early recognition of some items due for the second half as reasons for not increasing the high-end of its outlook.

"I don't think it matters if they make $1.40 or $1.50. They don't have any movies (this year)," Wedbush's Pachter said.

For the year, Marvel forecast earnings of $1.25 a share to $1.35 a share, on revenue of $465 million to $485 million. It had earlier forecast earnings of $1.10 to $1.35 a share, on revenue of $450 million to $485 million.

Analysts were looking for earnings of $1.33 a share, excluding items, on revenue of $482.5 million.

Investors are looking to see if Marvel -- whose profits have historically been spun around its most well-known character, Spider-Man -- can monetize and succeed with its non-Spider-Man brands.

Marvel will release an "Iron Man" sequel in 2010. "Thor" and the first "Avenger" movie, as well as Sony-produced (6758.T) (SNE.N) "Spider-Man 4" are slated for a 2011 release. The "Avengers" sequel will follow in 2012.

And News Corp-owned (NWSA.O) 20th Century Fox's "X-Men Origins: Wolverine," a movie based on Marvel characters, hit theaters earlier this year.

Earlier in the session, shares of Marvel -- which has a portfolio of over 5000 characters -- rose to an all-time high of $41.74 Tuesday on the New York Stock Exchange.

The stock has gained 33 percent in the last three months. (Editing by Aradhana Aravindan)

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