AMC Entertainment Holdings
He wants everyone to know that he’s back in shape after reopening in Los Angeles and New York City, but some analysts remain skeptical about his share price.
The stock fell more than 9% on Tuesday after Citigroup analyst Jason Bazinet reiterated his sell rating on the stock, with a price target of $ 2. The stock rallied a bit and is now trading around $ 13.
There has been a lot of good news lately for AMC (ticker: AMC) and other theater operators. Trade restrictions are being loosened in the US, as vaccines spread and people cautiously return to more normal conditions.
Films whose release was delayed last year are scheduled to debut in theaters in the coming months, hopefully attracting audiences despite occupancy limits.
AMC beat expectations for the fourth quarter, and CEO Adam Aron told analysts in an earnings call last week that he had shifted his focus from survival to “driving an increase in movie attendance and AMC’s recovery. , goals we feel Around the corner. “
And AMC has been able to sell stocks and debt to raise more than $ 2.2 billion in cash since last fall to weather the pandemic, according to Benchmark analyst James Goss, who has a Market Perform rating for the stock.
“AMC has taken numerous actions to improve its financial position.” Goss wrote in a note this week. “However, there is still great uncertainty for the company.”
Some investors are buying seemingly insensitive to such warnings. AMC shares have been a favorite of the so-called retail trading crowd of meme shares. Some of these investors will be eligible for federal stimulus checks of $ 1,400 and can use the money to buy more shares.
Still, Wall Street analysts like Bazinet see AMC as overvalued.
An AMC spokesperson did not respond to requests for comment.
The chain of cinemas has exploded in recent weeks, with its shares sometimes climbing double-digit percentages due to optimism about the economic reopening, and down to the same extent on fears that the reopening is not happening fast enough.
Case in point: AMC soared 25% on Monday, when the company said it was opening two big theaters in Los Angeles.
AMC shares are up 415% from last year, compared to a one-year gain of 57% on the S&P 500.
Analysts have pointed to the company’s $ 5 billion debt and estimated earnings per share in 2021 and 2022 that are still below 2019 levels.
“We see the company’s high leverage as an additional risk for an uncertain recovery,” Citi’s Bazinet said in a note Tuesday. “And we see recent developments in the industry that indicate that the strategic role of exhibitors is declining.”
Several analysts have set low price targets for the stocks. Credit Suisse has a target of $ 1.55, while Macquarie puts it at $ 5 per share (versus $ 4). MKM Partners downgraded the stock to Sell in February, with a price target of $ 1.
The most aggressive call so far came last week from Richard Greenfield of LightShed Partners, who said it was a 1-cent target sale. Greenfield’s view is that movie-going habits have permanently changed.
Hollywood has put pressure on the theater industry by releasing its new films on streaming services, either on the same day as they are released in theaters or after a significantly shorter exclusive theatrical run.
(CNK), the third largest theater chain, did not show
(DIS) new Raya and the last dragon earlier this month, and some reports said he was protesting this streaming launch strategy.
But it remains to be seen whether consumer preferences for home entertainment can be surpassed after a year of pandemic-induced lockdowns. Studio executives have said they are committed to the streaming model, Greenfield notes. And consumers have accepted it.
“As consumers return to theaters (beyond an initial burst of excitement to see anything away from home), we think they are likely to be much more selective in what they pay to see in a theater,” said Greenfield. .
Write to Liz Moyer at [email protected]