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Early praise for Star Wars awakens the Force in shares of Disney, EA

SAN FRANCISCO (Reuters) - Early praise for the newest installment of “Star Wars” gave a boost to shares of Walt Disney and Electronic Arts, which recently launched a videogame based on the hugely popular space opera.

Following prequels between 1999 and 2005 that were widely seen as disappointing compared to the original trilogy that began in 1977, fans at the premiere of “The Force Awakens” on late on Monday said the magic was back.

On Tuesday, shares of Walt Disney rose 3.75 percent while Electronic Arts, which last month released its “Star Wars Battlefront” videogame after three years of development, jumped 5.26 percent.

“Healthy chatter after the industry premiere last night in Los Angeles may have motivated some traders,” said JBL Advisors analyst Jeffrey Logsdon, who covers Disney.

Creator George Lucas sold the “Star Wars” franchise to Disney in 2012 for some $4 billion and the newest installment opens in most countries this week.

It could gross $2.8 billion worldwide, Logsdon wrote in a note to clients. That would put it in the same league as all-time top grosser Avatar, distributed by Fox in 2009.

Reviews of the movie are embargoed until Wednesday and analysts will have a reasonable idea of its money-making potential after its first weekend.

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Movie theater operators Regal Entertainment Group and AMC Entertainment Holdings were up 3.1 percent and 5.9 percent, respectively. Carmike Cinemas gained 2.9 percent.

Electronic Arts’ first-person shooter has received less-than-stellar reviews and retailer GameStop last week cut its price for the product.

But the movie’s long-awaited debut is expected to fuel demand from die-hard Star Wars fans both young and middle-aged, with Electronic Arts estimating it will sell 13 million units for the fiscal year ending March 2016.

That could account for almost a quarter of EA’s revenue during the second half of the year but such a target could be at risk if the movie does not resonate with fans, said Oppenheimer analyst Sean McGowan.

“It’s hard to make a case that the game will get a lift from the movie if people don’t like the movie,” McGowan said. “And if people come out of the movie feeling good about it, they’re more likely to buy the game.”

Also helping shares of Disney on Tuesday was an announcement it would launch an over-the-top content service in China with Alibaba.

Shares of Electronic Arts have gained 56 percent in 2015 while Disney has climbed 20 percent.

Reporting by Noel Randewich; Editing by Nick Zieminski