AMC Entertainment Holdings (NYSE:AMC) is set to report lower-than-expected earnings on Tuesday, said analysts at stockbroker Wedbush.
Wedbush said in a note today that he expects AMC’s fourth quarter revenue to be US$974 million.
Wedbush analyst Alicia Reese said in a note:
While performance across all is projected to lag behind estimates, Wedbush sees AMC gain market share buoyed by Premium Large Format (PLF) and the long-awaited James Cameron’s Avatar sequel, The Way. We believe we have outperformed our peers in terms of IMAX ticket sales boosted by the highly anticipated release of Water. was released in his December and has generally performed well at the box office.
Wedbush points out that AMC has the most PLF and IMAX screens in America, with Avatar leaning heavily toward PLF and IMAX, leading to higher average ticket prices for AMC.
Looking ahead, brokers expect box office returns to improve in 2023, but analysts at Wedbush say inflation will keep operating costs and prices at the concession counter high, especially for wages and energy costs. It is pointed out that
“Theatrical releases are on the road to normalization, and our 2023 release schedule is improving,” Reese said.
“Our early, rather conservative estimates put box office receipts in 2023 at 17% compared to 2022 (down 24% from 2019) and 64% year-on-year in 2022 (2019 35% decrease year-on-year).
“AMC has sufficient cash to continue operations in 2023 with an improved theater environment and a vast network of premium large-format screens, reducing its huge debt balance.”
Meanwhile, brokers speculate that AMC can continue its expansion by acquiring quality screens from struggling competitors and new ventures.
Regarding equities, Reese added:
Wedbush’s price target of $2 is well below the market price of $6.20, leaving the stock at an “underperforming” valuation.
In New York, AMC shares are seen trading higher on Monday ahead of Tuesday’s results.
