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Superhero Films Are Bulletproof: Just Ask Time Warner Inc (TWX) and Twenty-First Century Fox Inc (FOXA)

By Gal Goldring

Two films that garnered a lot of media attention, “Batman vs. Superman” and “Deadpool,” have contributed extensively to Time Warner Inc (NASDAQ:TWX) and Twenty-First Century Fox Inc (NASDAQ:FOXA) respectively. While the films received a wide range of reviews, both have made their marks in the box office, and the stock market. The films have exceeded analyst expectations, and managed to contribute to overall bullish outlooks for their respective parent companies.

Time Warner Inc

Time Warner Brothers’ long anticipated “Batman vs. Superman” film premiered Mach 12, 2016, but with poor critic ratings and mixed fan reviews, can these heroes “save the day” for Time Warner?

There is quite a bit of pressure weighing on the success of this film for Time Warner. Macquarie Capital analyst Tim Nollen explains, “Batman V Superman is the kick-off for 10 total DC Comics films to come in the next 6 years, as well as up to 12 new TV series and at least 3 new video games — so getting this one right is essential to the success of this entire franchise.”

The movie scored a subpar 44% from “MetaCritic” and an even further underwhelming 29% from “Rotten Tomatoes.” To add to these poor critic ratings, USA Today shared a less-than-positive review for the film, mentioning, “If there’s any justice, dawning or otherwise, at the multiplex, audiences will reject Zack Snyder’s lumbering, dead-on-arrival superhero mélange, a $250 million tombstone for a genre in dire need of a break.”

In spite of negative critic reviews, the release scored the fourth-biggest global debut in history, and the sixth biggest domestic launch. The success of the film depicted an impressive box office domestic total of nearly $300 billion, and a worldwide total of $783 billion as of April 10, 2016. Many point out that the film already surpassed production budget of $250 million.

Jeff Bock, senior box office analyst at Exhibitor Relations notes, “No matter how good or bad you think the film is, it was always going to open with $150 million or more.”

There seems to be a substantial divide between what critic ratings portray and how fans are reacting to the film. In terms of the stock market, the divide seems to be in favor of fans, with TWX stock price rising to $73.62 as opposed to $71.14 before the film premiered. RBC Capital analyst, David Bank, also weighed in on TWX rating the stock a Buy, with a price target of $92 on April 7. In this Batman vs Superman battle of “critics vs the box office,” the latter certainly triumphs.

According to TipRanks, TWX is currently rated a Strong Buy based on 12 analysts offering recommendations for the stock in the last 3 months. The average price target is $82.27 with an upside of 11.76%.

Twenty-First Century Fox Inc

The much anticipated 21st Century Fox film, Deadpool, known to be the “anti-superhero movie,” premiered February 11, 2016. The wildly talked about film set the box office on fire, at a domestic box office total of over $358 billion and a worldwide total of nearly $759 billion as of April 10, 2016.

Comscore analyst Paul Dergarabedian claims the film could gross between $500 million to $750 million at the global box office. The film surpassed the latter end of his estimation.

This impressive box office figure surpassed analysts’ expectations, who forecasted the film to bring in between $60 million and $70 million for the Friday to Monday period following its debut.

Further, Deadpool stole the spot of the biggest domestic opening weekend ever for an R-rated film, trumping the previous “The Matrix Reloaded,” which held the record in 2003 at $91.8 million. The film also beat the previous Presidents Day weekend record of “Fifty Shades of Grey.”

Deadpool received an impressive 83% on Rotten Tomatoes, and 65% on Metacritic. Cinemablend also contributed in positive reviews, commenting, “Deadpool is going to endear a whole new audience to the vivid and weird character, while once again demonstrating the tremendous opportunity for variety in the comic book movie genre.”

Clearly, critics have nothing but good reviews for the film, but what does the success of Deadpool mean for 21st Century Fox? The stock was priced at $24.33 prior the film premiere, and is currently priced at $28.59. The substantial amount of good reviews and approval ratings positively reflect on the success of the stock, which has continued to rise since the release of the film.

According to TipRanks, FOXA is currently rated a Moderate Buy based on 9 analysts offering recommendations for the stock in the last 3 months. The average price target is $34.44 with a 20.46% upside.