2020-07-15 15:47:36 | Cinema stocks spike higher after analyst sees recovery helping sharesShares of cinema-related companies are moving higher on Wednesday after Goldman Sachs analyst Michael Ng initiated coverage of movie theaters, including IMAX (IMAX) and Cinemark (CNK). RECOVERY SHOULD BOOST CINEMA: The analyst and his team at Goldman initiated coverage of IMAX with a Buy and a 12-month price target of $14 and Cinemark with a Neutral, and a 12-month price target of $12. In the research report, the analyst noted the muted outlook for the near term industry box office due to closures from COVID-19 and shelter-in-place measures. IMAX's specialty of "blockbuster films" rather than smaller and mid-budget films, which are vulnerable to competition from alternative distribution platforms like PVOD and streaming, put it in a "better" position for a recovery, especially with its capital-light business model and cash position. Ng sees Cinemark benefiting from a U.S. recovery, however, it faces an "idiosyncratic risk" relative to other exhibitors given its exposure to Latin America. He noted that Brazil is the company's largest market in Latin America and currently has the second-highest number of COVID-19 cases in the world. PRICE ACTION: Shares of Cinemark Holdings are up 14.5% to $14.12, while IMAX is up 15% to $12.95 per share. OTHER ENTERTAINMENT STOCKS TO WATCH: AMC Entertainment (AMC), Six Flags (SIX), Dave & Buster's (DAVE), Live Nation (LYV), and Marcus (MCS). | |
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