AMC Entertainment Holdings (NYSE:AMC) will report revenues shy of expectations on Tuesday, according to analysts at stockbroker Wedbush, which have an ‘underperform’ rating for the cinema operator and meme-stock.
Wedbush, in a note today, said it is anticipating AMC’s fourth-quarter revenue will amount to just US$974mln which is lower than the broker’s previous estimate of US$1.16bn and also lower than the market consensus forecast of US$1.01bn.
“We lowered our revenue estimate as early-quarter attendance trends were slower than we had originally anticipated,” Wedbush analyst Alicia Reese said in the note.
Whilst overall all performance is predicted to have lagged estimates, Wedbush reckons AMC outperformed peers in terms of market share helped by premium large format (PLF) and IMAX ticket sales boosted by the long-awaited release of James Cameron’s Avatar sequel, The Way of Water, which came out in December and has broadly done well at the box office.
Wedbush notes that AMC has the most PLF and IMAX screens in America, and, Avatar ‘skewed heavily toward PLF and IMAX, driving average ticket prices higher for AMC.
Looking ahead, the broker anticipates an improving 2023 for box office, meanwhile, the Wedbush analysts note that operating costs and prices at the concessions counter remain elevated due to inflation, in particular regards wages and energy costs.
“Theatrical exhibition is on the path to normalization, with an improving release slate in 2023,” Reese said.
“Our early, and rather conservative, estimates are for 2023 box office to end up 17% over 2022 (down 24% over 2019), after ending up 64% YoY in 2022 (down 35% over 2019).
“AMC has plenty of cash to continue operating through an improved theatrical environment in 2023 with its vast network of premium large format screens, while chipping away at its massive debt balance.”
The broker meanwhile speculated that AMC can continue its expansion through the acquisition of high-quality screens from faltering competitors and new ventures.
Regarding the stock, Reese added: “We value AMC at a premium multiple relative to its pre-COVID historical range of 7 to 9 x due to its majority retail ownership who value AMC shares significantly higher than AMC’s peers."
Wedbush’s target price of US$2 remains a long way lower than the market price of US$6.20, and, it mains an ‘underperform’ rating for the stock.
In New York, AMC stock is seen trading higher on Monday ahead of Tuesday’s results - up $0.23 or 3.71% priced at US$6.43.