logo-loader

Cineworld’s shares now present good value, says broker

Published: 10:47 27 Jan 2016 GMT

starwarsForceAwakens

Nomura stopped short of Jedi mind tricks whilst upgrading Cineworld (LON:CINE) shares today, but, insisted that the cinema operator’s underperforming shares now offer good value.

The group’s performance failed to meet high expectations, amid 2015’s blockbuster releases such as Star Wars: The Force Awakens and the latest instalment of the Bond franchise.

Analyst Richard Stuber highlighted that Cineworld has typically underperformed its rivals in ‘blockbuster-heavy’ years, partly due to its unique membership scheme, but, for the same reason it performs best when there are fewer big movie releases.

Some 30% of Cineworld’s box office revenue comes from the membership cards, which cost £16.90 per month and allow customers ‘unlimited’ screenings. Stuber highlights that the scheme sees a high renewal rate and therefore provides positive longer-term revenue visibility.

“The 2016 film slate is widely expected to be inferior to 2015 and therefore expectations for the market (and CINE) will be less inflated,” the analyst said in a note. “Nevertheless, it does include some popular franchises and is well spread out over the year.”

Nomura upgraded Cineworld to a ‘buy’, with a price target of 588p which suggests some 20% of upside to the current price of 292p.

Elsewhere, both HSBC and S&P Capital upgraded budget airline Easyjet (LON:EZJ) which yesterday said trade was now picking up again, after it had taken a hit from lower demand following the Paris terror attacks.

HSBC lifts its rating to ‘hold’ from ‘reduce’, while S&P Capital sees the airline as a ‘buy’.

Credit Suisse upgraded ICAP (LON:IAP) to ‘outperform’ from ‘neutral’.

Chemicals firm Synthomer (LON:SYNT) - formerly Yule Catto - was upgraded to ‘buy’ from ‘hold’.

The Swiss bank meanwhile cut oil and gas firms BP (LON:BP.) and BG Group (LON:BG.) to ‘underperform’ and ‘neutral’ respectively.

Chesnara reports strong 2023 results with improved cash generation and...

Chesnara PLC (LSE:CSN) chief executive Steve Murray discusses the company's full-year results for 2023 with Proactive's Stephen Gunnion, describing them as strong and particularly highlighting £53 million in commercial cash generation and a dividend coverage of around 150%. The company has...

1 hour, 17 minutes ago