Roth MKM predicts that AMC Entertainment Holdings Inc. is poised to profit from better-than-expected box office results. In a recent note, analyst Eric Handler stated that the higher-than-projected box office outcomes have prompted an increase in their third-quarter revenue estimate. The estimate has been raised to $1.304 billion, representing a 35% year-over-year increase and only a 1% decline from the third quarter of 2019, prior to the COVID-19 pandemic. Furthermore, the adjusted EBITBA estimate for AMC has also been revised upwards to $161 million from $116 million.
According to Roth MKM, AMC’s domestic box-office market share is anticipated to improve compared to the previous year due to the impressive performance of Imax Corp. This success can be attributed to the popularity of the summer blockbuster film “Oppenheimer.”
To account for the recent 1-for-10 reverse stock split of the movie-theater chain, Roth MKM has also adjusted its price target for AMC. The new price target stands at $5, a significant increase from the previous target of 50 cents.
Despite these positive developments, shares of AMC experienced a decline of 7.1% during Wednesday’s trading session. This decline exceeded the 1.3% decrease in the S&P 500 index.
In July, AMC reported its “best week ever” for admissions revenue, thanks to the success of “Barbie” and “Oppenheimer.” Additionally, AMC saw numerous U.S. locations setting single-week box office records, with the greater Los Angeles market accounting for 13 of these locations. Furthermore, the movie-theater chain witnessed its busiest weekend since 2019, largely attributed to the release of “Barbie” and the cultural phenomenon known as “Barbenheimer.”
Overall, AMC Entertainment Holdings Inc. is well-positioned to capitalize on its strong box office results and is expected to see continued success in the coming months.
- AMC enjoys ‘best week ever’ for box-office revenue, fueled by ‘Barbie’ and ‘Oppenheimer’
- AMC had its busiest weekend since 2019, boosted by ‘Barbie’ and ‘Oppenheimer’
Taylor Swift’s Concert Film Breaks Record for Advance Ticket Sales
During the summer, AMC announced that “Taylor Swift: The Eras Tour” has shattered the company’s record for single-day advance ticket sales, generating an impressive $26 million in ticket sales revenue on August 31.
AMC’s Distribution Business Not Seen as Transformative
While AMC is showing Taylor Swift’s highly anticipated concert film in its theaters and serving as a theatrical distributor for the record-setting movie, Roth MKM does not view AMC’s distribution business as transformative. According to Handler, a representative from Roth MKM, “AMC received a lot of press when it announced it would serve as the distributor for ‘Taylor Swift: The Eras Tour’ movie and again for ‘Renaissance: A Film by Beyonce.’ However, we believe distribution is a low return/margin business.”
Handler further explains, “Distribution fees for most major movie studios range from 10% to 15%. We believe AMC undercut studio rates to partner with Taylor Swift and Beyonce, offering a fee in the range of 5% to 6%. AMC is responsible for marketing and promotion, and is paying Variance Film, who is coordinating bookings.”
Related: ‘Taylor Swift: The Eras Tour’ Sets Imax Opening Record
AMC has yet to respond to a request for comment.
Cash Burn Remains a Concern for AMC
Roth MKM highlights that cash burn continues to be an issue for AMC. Handler states, “We assume further share issuances will be necessary to maintain a comfortable liquidity level.”
Despite these concerns, Roth MKM maintains its sell rating for AMC. Among seven analysts surveyed by FactSet, four have a hold rating, and three have a sell rating for AMC.