Dreamworks Animation Doing Awesome Thank You. Michael Morris Back Pedals

Jim here. I have got to laugh sometimes - especially at anyone who doubts the power of 3D. In this case it was a financial analyst with UBS by the name of Michael Morris who panned Dreamworks Animation as topping out. LOL. This was before they had released any 3D movies by the way!

Back in June, Morris stated: "We are downgrading the DreamWorks shares to Sell from Neutral reflecting our belief that the current share price exceeds the true intrinsic value of the company," analyst Michael Morris wrote in a note to clients.

Morris believes that -- at its current level -- DreamWorks' stock implies that all future films will gross more than $200 million domestically, which is above the company's historic average.

"The success of 'Kung Fu Panda' has generated increased enthusiasm for DreamWorks, but we now view the company's risk/reward profile as unattractive," Morris wrote. "Despite its strong opening weekend, we remind investors that they are buying all future films at a 'Kung Fu Panda' level performance at this point."

LOL. And where does this lead us? Here is his retraction today: UBS analyst Michael Morris upgraded the stock from "sell" to "neutral," "primarily based on updated assumptions for future DVD profitability." He explained: "Our revised assumptions reflect data provided by management reflecting both stable demand and pricing even in the current period of macro-economic weakness."

Someone needs to educate Mr. Morris that 3D brings in additional revenue and that you can legitimately tack on points because of it. He still hasn't acknowledged it whatsoever as far as I can see. Glad to see him getting back in line after hearing about how well Dreamworks Animation has done with DVD sales.

My recommendation? If you are buying stock, buy DWA stock. How could you do any worse by me? :-) DWA stock was up 25.2% yesterday after their awesome earnings call. Yes, Morris was asking questions during the call too, but didn't try to get too fancy...

Sources: MarketWatch, THR