AMC Delays Theatre Openings; Top Analyst Cuts Price Target

AMC Entertainment (AMC) announced today that it will delay theatre openings until the end of July after two studios decided to postpone the release of their movies in light of the COVID-19 pandemic.

Shares are down 4% on Tuesday morning at $4.25 per share.

Initially, AMC plans to open 450 locations on July 30, followed by 150 more in August. The re-opening will coincide with the August releases of Disney’s Mulan and Warner Brothers’ Tenet which are anticipated to be the main blockbuster draws for this summer.

“Our theatre general managers across the U.S. started working full time again today and are back in their theatres gearing up to get their buildings fully ready just a few weeks from now for moviegoers,” CEO Adam Aron stated on June 29. “That happy day, when we can welcome guests back into most of our U.S. theatres, will be Thursday, July 30.”

Imperial Capitalist analyst David Miller lowered the price target on AMC today, from $6 to $4 while maintaining a Hold rating, citing the delayed openings of AMC theatres. The move implies a 6% downside.

Before COVID-19, AMC’s revenue was experiencing a gradual decline even with ticket price and concession sale increases. The company suffered a $2.2 billion loss in Q1.

Credit Suisse analyst Meghan Durkin, on June 29, downgraded AMC’s rating to Sell from Hold and cut the price target by half to $2 per share. The move implies a 53% downside. She anticipates, “more risk to AMC’s business model if there is a slow risk to AMC’s recovery.” Durkin also reduced her rating to Hold for Cinemark (CNK) movie theatre chain and cut the price target from $20 to $13.

The stock is down 41% year-to-date with a Hold analyst consensus that breaks down to 1 Buy rating, 6 Hold ratings, and 3 Sell ratings. The $4.57 average price target implies 8% upside potential for the shares in the coming 12 months. (See AMC’s stock analysis on TipRanks).

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