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Amc Entertainment Receives Strong Sell Rating Despite Q1 Outperformance

By Don Francis, Editor
May 15, 2024 7:05 AM UTC
Amc Entertainment Receives Strong Sell Rating Despite Q1 Outperformance

Citigroup's Jason Bazinet raised their price target on Amc Entertainment (NYSE: AMC) by 3.2% from $3.1 to $3.2 on 2024/05/14. The analyst maintained their Strong Sell rating on the stock.

Amc Entertainment, the movie theater chain, recently reported its Q1 2024 earnings. According to Bazinet, the company's Q1 revenue and adjusted EBITDA were in line with its preliminary results. Bazinet also mentioned that they updated their model in response to the earnings report.

For Q1 2024, Amc Entertainment reported a loss per share of $0.62, which beat the consensus estimate by 19% and showed a significant improvement compared to Q1 2023's loss per share of $(1.51) by 58.9%. The company's revenue for the quarter was $951.4 million, beating the consensus estimate by 4% and remaining largely in line with Q1 2023's $954.4 million.

During the earnings call, management reiterated its prior guidance for FY 2024. They expect revenue of $2.4 billion and aim to generate cumulative free cash flow of $0.5 billion by 2025. The company also anticipates consolidated AOI (Adjusted Operating Income) to range between $550 million and $575 million. Despite revenue headwinds in the New Year business, Amc Entertainment remains focused on continued streaming and digital advertising growth, as well as disciplined expense management.

Chairman Adam Aron expressed satisfaction with AMC's performance in Q1, stating, "We're pleased to report that AMC outperformed in the first quarter. AMC exceeded consensus estimates for Revenue, Adjusted EBITDA, Net Income, and EPS." Aron acknowledged the impact of the Hollywood actor and writer strikes of 2023 on Q1's box office but highlighted the strength of moviegoing in March 2024, which indicated better times ahead.

While Q2's box office is expected to be affected by the 2023 Hollywood strikes, Aron expressed confidence in the upcoming film lineup for the second half of 2024 and throughout 2025. He also mentioned an announcement made just the day before about a unique Listening Event to be held by Billie Eilish at many AMC theaters across the U.S. as part of her next album launch.

Despite the positive outlook from management, it is worth noting that none of the top-rated analysts currently rate AMC as a Strong Buy or Buy. 50% of analysts see it as a Hold, while the remaining 50% either recommend or strongly recommend selling the stock.

Since AMC's latest quarterly report on May 8, 2024, the stock price has surged by 114.7%. However, on a year-over-year basis, the stock is still down by 86.7%. During this period, AMC has underperformed the S&P 500, which has experienced a decline of 26.8%.

Citigroup analyst Jason Bazinet, who raised the price target on AMC, is ranked in the top 16% of Wall Street analysts by WallStreetZen. With an average return of 2.6% and a win rate of 59.2%, Bazinet specializes in the Consumer Defensive and Real Estate sectors, among others.

AMC Entertainment Holdings, Inc. operates movie theaters in the U.S. and E.U. The company, founded in 1920, currently operates 950 theaters and 10,600 screens under brands such as AMC, AMC CLASSIC, and AMC DINE-IN. In addition to movie screenings, AMC offers food and beverage services. The company is headquartered in Leawood, Kansas.

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