BMC Riley analyst Eric Wold said it’s time to buy shares of AMC Entertainment Holdings Inc. on the grounds that the outlook for the balance sheet has improved and that “Godzilla “Godzilla vs. Kong” opened strongly, indicating a rebound in demand.
The stock AMC of the movie theater chain,
In the past two weeks, meme stock has plunged 32.8%, and the stock has risen 11.2% in early trading.
Wald upgraded its rating from neutral to buy, and raised its target price from $7 to $1
Wald wrote in a report to a client: “By strengthening the balance sheet and negotiating with landlords to improve cash flow in 2022, we are still impressed by the management’s ability to withstand the pandemic.” “As the largest in North America. Exhibitors also have the largest number of IMAX screens. We believe that AMC is in a good position to benefit from the expected recovery of the industry and resume pre-pandemic attendance levels by 2023.”
Also watched: AMC lost nearly $1 billion during the holidays, but as executives see better days, the stock is rising.
Before the upgrade, Wald said that Warner Bros.’s “Godzilla vs. King Kong” was “impressive” at the domestic box office at the weekend. Warner Bros. (Warner Bros.) is owned by AT&T Inc.’s T,
do not miss it: Since the beginning of the pandemic, “Godzilla vs. King Kong” has performed best at the box office.
Wald said that although the open space of North American theaters is only about 60% and the average limit of seating capacity is from 25% to 50%, the movie’s domestic box office revenue is still about 48.5 million U.S. dollars. In comparison, “Godzilla: King of the Monsters” had a box office of $47.8 million when it opened in May 2019.
Wold wrote: “We believe that consumers want to leave home and return to the theater. These results are very convincing, especially considering that the movie is shown in theaters while being provided to HBO Max subscribers for free.”
In recent months, AMC investors have experienced a roller coaster ride as the stock has been caught up in a trading frenzy surrounding a large number of short-selling stocks, including GameStop Corp. GME,
The sell-off in the past two weeks follows a five-week winning streak, and the stock has soared 149.2%. The impetus for the stock market’s rise was that the stock fell by more than half (57.8%) in the two weeks following its surge of 52.55% in January.
The stock’s closing price on Thursday was 53.0% lower than the two-year-old closing high of $19.90 on January 27, but it is still up 341.5% so far this year. The S&P 500 index SPX,
At the same time it increased by 7.0%.
B. Riley’s Wold said his only concern about AMC, and the reason for the previous neutral rating, is that the company’s high debt may put pressure on future cash flow.
“However, as management increasingly demonstrates the ability and willingness to use equity to reduce the debt burden, we can now be more constructive about the opportunity for stocks to rise,” Wald wrote.