Let's Go To The Movies: Loop Capital Initiates Cinemark At Buy, $44 Target

Loop Capital’s David W. Miller believes Cinemark Holdings, Inc. CNK is a growth stock and “the highest quality name in the exhibition sub-space.”

Miller initiated coverage of the company with a Buy rating and price target of $44.

Growth Stock

The analyst mentioned that the stock offers “everything growth investors could want — stellar unit growth, enviable cost management, consistent overindexing against the general market, industry-leading margins, demand curves which continue to move to the right, a stable management team, and a robust dividend.”

Miller pointed out that the Street values the top domestic player at a premium based on the domestic screen count, with the logic that a higher screen count equates to more supplier power over the Studio system.

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The LatAm Advantage

However, the analyst explained that “the domestic box office is essentially a mature business. Studios rely less on domestic cumes nowadays, and instead focus a lot more attention and marketing dollars towards the international box office, which is a hyper-growth business.”

Cinemark has 4,566 domestic screens, but the company also operates 1,298 screens in Latin America and continues to add an average of 64 screens each year in that region.

Miller believes the market still does not recognize the “scarcity value” of Cinemark, given that “CNK is the only public way to play the Latin American box office itself.”

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