UPDATE: MKM Partners Initiates Coverage On AMC On Theater Modernization And Strong Content

In a report published Friday, MKM Partners analyst Eric Handler initiated coverage on AMC Entertainment AMC with a Buy rating and $28.00 price target.

In the note, Handler emphasized a few factors equating to an appealing Buy.

The first variable, theater modernization efforts focuses on luxury theater-reseating and enhanced concessions. MKM Partners sees the efforts from the modernization, along with a positive content cycle, driving better-than-expected financials.

The analyst estimates that AMC Entertainment will generate four percent in revenue and 10 percent in adjusted EBITDA CAGR over 2013 to 2016. Luxury re-seats in 410 theaters have seen gains of approximately seven percent over four percent in the “broader group.”

MKM Partners forecasts strong content cycle for 2015 and 2016, in its second factor. The analyst sees 4.5 percent and two percent growth, respectively, over the next two years.

Handler's view is driven by upcoming key titles including, “Fast & Furious 7, The Avengers: Age of Ultron, James Bond 24, Star Wars: Episode 7, Mission: Impossible 5 and the finale of The Hunger Games. The 2016 slate is still building, but includes Batman vs Superman, Captain America 3, X-Men: Apocalypse, Avatar 2, an untitled Star Wars spin-off and the Harry Potter spin-off Fantastic Beasts and Where to Find Them.”

Shares of AMC Entertainment closed at $22.95 on Thursday.