AMC Entertainment (AMC) reported better-than-expected revenue for the fourth quarter of 2024 and a narrower loss per share on a year-over-year basis though it was higher than the Street’s loss estimate. The year-over-year improvement was backed by popular releases, including Moana 2 and Wicked, that led to a 20% rise in attendance in theatres in Q4 2024. While several analysts acknowledged this improvement, they remain on the sidelines as they await further recovery in the company’s financials.
Analysts React to AMC’s Q4 Results
On Monday, Benchmark analyst Mike Hickey reiterated a Hold rating on AMC stock without assigning a specific price target. The analyst thinks that the company’s Q4 beat on revenue and adjusted EBITDA underscore solid consumer demand, operational efficiency, and strategic execution. He also noted AMC’s premium format expansion and an attractive content slate for 2025 and 2026, which are expected to drive continued growth.
Hickey stated that AMC continues to strengthen its balance sheet and reduce overall debt. It extended $2.4 billion of debt maturities from 2026 to 2029 and beyond, ensuring greater financial flexibility. Further, he highlighted that AMC generated $204 million in operating cash flows and $114 million in free cash flow, marking its strongest post-pandemic cash flow quarter. Hickey also pointed out the company’s streamlining measures, including the closure of 192 underperforming locations since the pandemic, along with the addition of 62 high-performing theaters. However, Hickey remains on the sidelines currently, seeking further improvement in AMC’s performance.
Likewise, Roth MKM analyst Eric Handler contends that while AMC is moving in the right direction, more financial engineering needs to be done. Nonetheless, he noted that Q4 results highlighted over $100 million in free cash flow, which is a positive step for the company. Handler anticipates continued financial improvement over the coming two years, fueled by an expected box office recovery. However, Handler is sidelined on AMC stock, as free cash flow is likely to remain negative this year, and the company might have to raise additional equity capital. Handler has a Hold rating on the stock with a price target of $3.25.
Is AMC Stock a Good Buy?
While AMC Entertainment is expected to gain from a strong lineup of releases this year, including Wicked: Part Two, Zootopia 2, and Avatar 3, concerns about the company’s financial position continue to weigh on the sentiment for the stock.
Overall, Wall Street is sidelined on AMC stock with a Hold consensus rating based on five Holds and one Sell recommendation. The average AMC stock price target of $3.54 implies about 16% upside potential from current levels. AMC Entertainment stock is down more than 23% year-to-date.
