Signifying the Covid pandemic might be behind us now, AMC Entertainment (AMC) beat expectations in its latest quarterly report.
As attendance leaped to around 39.1 million in Q1, from 6.9 million in the same period last year, revenue clocked in at $785.7 million, amounting to a 429.8% year-over-year increase and coming in above the $743 million Wall Street had expected.
However, audience turnout volumes are still below pre-pandemic levels, while the costs to service the debt accrued during the pandemic’s lockdown keep weighing on the company’s profitability. As such, AMC reported a net loss of $337.4 million – translated to an adj. EPS of -$0.52. That said, the figure was someway better than the loss of $0.63 per share Wall Street had in mind and also an improvement on the $567.2 million net loss delivered in the same period a year ago.
That could further improve as the year progresses, with several big-budget movies – Avatar 2, Top Gun: Maverick, Black Panther: Wakanda Forever, Jurassic World Dominion – about to be released.
In fact, Wedbush analyst Alicia Reese thinks 1Q22 amounted to the “final quarter of pandemic-affected box office.”
Time to turn bullish on AMC again, then? Not quite. While Reese expects attendances to “meaningfully improve” this year and applauds AMC’s savvy use of its “Meme Stock” status (the company raise significant capital to pay down and restructure debt, purchased a number of quality screens (and intends to add more), and has made inroads into various alternatives for potential future revenue sources), she is not yet convinced.
“We expect continued volatility, with an uncertain long-term multiple given its ownership and the possibility that at some point AMC will launch its own cryptocurrency,” Reese summed up.
All told, Reese reiterated an Underperform (i.e., Sell) rating on AMC shares, and due to higher net debt, lowered the price target from $5 to $4. The revised figure implies ~65% downside from current levels. (To watch Reese’s track record, click here)
A look at the consensus breakdown does not inspire much confidence either. AMC stock’s Moderate Sell consensus rating is based on 2 Holds and 3 Sells. Going by the $7.67 average target, the shares are expected to tumble ~34% over the next 12 months. (See AMC stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
