AMC Entertainment Holdings Inc.’s better-than-expected third-quarter results set the movie-theater chain up well for 2024, according to analysts.
“We think AMC is well-positioned in [fourth quarter 2023] and 2024, particularly as the SAG-AFTRA labor strike has finally come to an end,” Wedbush analyst Alicia Reese said in a note released Thursday. “We expect 2023 North American box office to end up 23% over 2022, or 80% of 2019 box office, with AMC at least maintaining its 22% market share if not expanding with its vast network of premium large format screens and as it distributes two major concert movies in [the fourth quarter].”
She added: “Moviegoers are finicky with content these days, but we are seeing that they also increasingly opt for premium screens and a larger basket of high-margin concessions.”
Related: Hollywood actors strike is over as union reaches tentative deal with studios
Speaking during a conference call to discuss the results, AMC CEO Adam Aron discussed the success of Taylor Swift’s record-breaking concert film, which opened Oct. 12. “Both as distributor and exhibitor, AMC benefited handsomely,” he said, adding that AMC Theatres Distribution is following up on this success with the release of “Renaissance: A Film by Beyoncé,” which hits theaters globally Dec. 1.
The CEO also hinted at more big-name concert films in the future. “We believe that we will have several more concert-film products in 2024 and 2025,” he said. “We intend to be working with some of the most known and most loved musical artists the world has ever known.”
Wedbush maintained its neutral rating and $11 price target for AMC. “The company’s heavy debt load and lack of dividend keep us from valuing shares any higher,” Reese said.
Related: AMC swings to Q3 profit, reports positive net income for second straight quarter
In a note released Thursday, Benchmark analyst Mike Hickey highlighted the progress AMC has made following the disruption wrought by the COVID-19 pandemic. “Despite a 16% decline in domestic box office attendance compared to 2019, AMC’s success was attributed to a 30% increase in contribution per patron and strategic actions taken over the past three and a half years, such as innovative marketing, cost management, and theater optimization,” he wrote. “These results reflect AMC’s promising growth path to recovery in the post-pandemic era.” Benchmark maintained its hold rating for AMC.
During AMC’s third-quarter conference call, CEO Adam Aron warned that the Hollywood writers and actors strikes would cause challenges for AMC in 2024. Just a few hours later, the Screen Actors Guild-American Federation of Television and Radio Artists announced a tentative deal with studios. Hollywood writers ended their strike in September.
“The strikes in Hollywood are finally settled!” tweeted AMC CEO Adam Aron Thursday. “AMC’s reaction to the news: Hallelujah!”
Related: AMC’s strong Q3 results lift movie theater stocks
AMC shares fell 20.6% in premarket trading Thursday after the company filed for an “at the market” sale of up to $350 million in common shares. The company’s stock has fallen 71.9% in 2023, compared with the S&P 500’s
SPX
gain of 14.2%.
Read the full article here
