JPMorgan upgrades Cinemark and says now is the time to buy after a recent sell-off and the success of Avatar
A sell-off at Cinemark combined with the success of the latest installment in the “Avatar” franchise makes now a great time for investors to buy the stock, according to JPMorgan. JPMorgan upgraded Cinemark to overweight from neutral, while maintaining its price target of $15, up more than 57% from the stock’s current price. Shares rose 2.5% on the news in premarket trading. “After shares are down 31% since early December (vs. SPX -3%), we believe the risk/reward trade-off is more favorable to rate the stock positively,” analyst David Karnovsky wrote in a note on Thursday. CNK 3M Mountain Cinemark Holdings chart down 30% in December “The sell-off we’re seeing was largely due to the performance of Avatar: The Way of Water, which was released on 16th since it’s shown strong legs and is likely to be in the top ten of the All-time highest-grossing films are landing,” he added. Box office boost This bodes well for the cinema chain’s future, even in the face of a possible US recession. said Karnovsky. JPMorgan also now has a greater level of confidence in its 2023 North American box office guidance, seeing continued recovery in film supply. Commitments from big streamers like Amazon and price increases should help cinemas to grow in the long term. “Meanwhile, comments from major studios appear to have reached a tipping point in recent months, with a shift away from subscriber growth at any cost to strategies that use more flexible distribution to maximize the value of films through theaters and DTC,” he said.According to JPMorgan, more stability in this industry model should help Cinemark benefit and its multiples return to pre-pandemic levels.Of course, there are still some risks on the horizon that could put near-term pressure on the stocks, such as such was the case with the recent sell-off, including underperformance from upcoming film releases and risk stemming from Cinemark’s high level of financial leverage — although the latter should decline with growth and the company has no significant debt maturities through March 2025, he said JPMorgan But the prospects for the Kin Cassettes, which are growing 15% year-on-year and are expected to add more films each year, offer benefits, especially as streamers and small-to-medium-sized studios look to fill their calendars. “Looking ahead to 2024, while still early, we are encouraged as we are already seeing 25 films that can gross over $100 million and expect overall wide releases to increase, although they are always growing have not yet reached pre-pandemic levels,” he told Karnowski. – CNBC’s Michael Bloom contributed to the coverage.
https://www.cnbc.com/2023/01/12/jpmorgan-upgrades-cinemark-says-now-is-the-time-to-buy-after-a-recent-sell-off-and-avatar-success.html JPMorgan upgrades Cinemark and says now is the time to buy after a recent sell-off and the success of Avatar
