An analyst I know well, Michael Morris of UBS, downgraded Dreamworks Animation (DWA) this morning driving the shares down more than 7%. I added a little to some smaller client positions on the weakness. The downgrade is based on Morris’ belief that even after after raising his outlook for Kung Fu Panda the shares are slightly overvalued. Obviously, I disagree. I think Michael’s valuation target and estimates are conservative. Supporting my case is the fact that through Tuesday, Panda is tracking almost exactly equal to Cars which grossed $$244 million in North America. Michael adjusted his DWA model by increasing his gross from $170 to $200 million. The upcoming second weekend will be critical to determining the ultimate North American gross for Panda but I remain very confident it will be comfortably north of $200 million.