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DreamWorks' Competition May Get More Animated

Prudential Equity Group reiterated a "neutral weight" rating and $41 target price on DreamWorks Animation (nyse: DWA - news - people ), saying fourth-quarter results will be driven primarily by home video sales of "Shrek 2" and box office receipts from "Shark Tale." The research firm said it expects fourth-quarter earnings per share of $1.84 on revenue of $486.5 million. (The current Street earnings-per-share consensus is $1.58.) Prudential lowered its full-year 2004 earnings-per-share estimate to $2.91 from $3.01 and raised its 2005 estimate to $2.37 from $2.04, saying it raised the estimates for pay-per-view and television revenues for films beginning with "Shrek 2" while lowering our estimates for merchandising revenue for films beginning with "Shark Tale." The research firm warned that the animated film market could become more crowded given the success of DreamWorks Animation and Pixar Animation Studios (nasdaq: PIXR - news - people ), adding that computer-generated (CG) animated films have "among the highest returns of all film genres." Prudential said that LucasFilm, Twentieth Century Fox, a division of News Corp. (nyse: NWS - news - people ), and Miramax may enter the CG animated film market in the near future.
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