Lionsgate Studios Corp (LION): 60% FCF Library Margins In The Quiver -- A Packed November Slate Ahead

Morgan Stanley reiterates Overweight on Lionsgate Studios Corp (LION.N) with a $15 price target. Library free cash flow exceeds $1bn at ~60% margins versus MSe ~$1bn and 50%, a key metric in a potential takeout and implying upside to the $19 takeout scenario bull case. F2Q OIBDA of $72mm came in nicely ahead of consensus at $52mm, with upside in both Motion Picture and Television profits; Motion revenue rose 30% to $359.3mm. With The Housemaid and Michael in the books, the next Hunger Games is the key theatrical release, with MSe $65mm opening weekend and ~$225mm total domestic box office versus a franchise high and low of $425mm and $166mm. The CY27-28 slates are loaded with premium and reliable IP including The Resurrection 1 and 2, John Rambo, Blair Witch Project and Housemaid 2. FY27/28 estimates remain largely unchanged; the $15 target reflects 20x forward adjusted EBITDA, or 17x excluding production loans.