Challenges Facing Movie Theaters

by Warren Seah

Taylor Swift Sets Records

Looking Into the Future

Reassurance Amidst a Challenging Climate

Cinemark and Imax: Potential for Upside in the Second Half of 2024

Macquarie Predicts Favorable Outlook for Cinemark and Imax

In a recent note, financial services firm Macquarie expressed its belief that Cinemark and Imax are currently undervalued, based on their revised estimates. The firm maintained its outperform rating for both companies but adjusted their price targets slightly downwards. Macquarie’s analyst, Beynon, emphasized that although business improvements may yield upside potential, it is more likely to occur in the second half of 2024.

AMC Entertainment Holdings: Balance Sheet Improved, Margin Improvement Needed

Beynon also discussed AMC Entertainment Holdings, highlighting the company’s recent completion of a $350 million equity offering, which has reduced its risk as a meme stock. However, to recommend AMC as a favorable investment, Beynon noted the importance of seeing a margin improvement that would close the substantial gap of approximately 800 basis points compared to Cinemark.

AMC’s CEO Expresses Frustration Amid Stock Decline

In an effort to address the decline in AMC’s share price, CEO Adam Aron turned to X (formerly Twitter), expressing his frustration and pointing to the negative impact of the 2023 actors and writers strikes on the early 2024 box office. Aron previously described the decline in AMC’s share price as “painful,” acknowledging the persistent effects of the COVID-19 pandemic on the movie-theater industry.

Reading International: Hidden Value Awaits Execution

Macquarie’s Beynon also touched upon cinema owner Reading International. While the company has faced challenges due to declining industry trends, it has taken steps to improve its balance sheet by selling non-core assets and paying down debt. Macquarie maintained a neutral rating for Reading International and set a price target of $2.50, emphasizing that there is still hidden value to be unlocked if the company can execute its strategy effectively.

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