Loop Capital believes Cinemark Holdings, Inc. CNK should be bought aggressively at these levels given strong Q3 box office performance.
The brokerage maintained its Buy rating and $44 price target, which implies a potential upside of 15 percent.
The brokerage said Cinemark trades at an 11.1 percent discount to Regal Entertainment Group RGC, and a 9.7 percent discount to AMC Entertainment Holdings Inc AMC.
"With everything any GARP investor would want within this cap discipline – stellar unit growth, enviable cost management, consistent over-indexing, industry-leading margins, demand curves which continue to move to the right, a stable management team, and a robust dividend, we see no reason why CNK should not trade up to at least 9.0x projected 2017 EBITDA over the next 12 months, or the equivalent of $44.00," analyst David Miller wrote in a note.
Miller said it appears that Cinemark's Q3 top line admissions revenues finished up +12.1 percent on strong performance of Jason Bourne, Legend of Tarzan, The Secret Life of Pets, and Suicide Squad.
Miller believes Cinemark's top line admissions revenue, on a blended basis, with currency, finished up 10.9 percent. The analyst raised his Q3 core EPS estimate moves to $0.58 from $0.53 and net admissions revenue estimate to $478.7 million from $462.2 million, while aggregate revenue estimate to $779.2 million from $754.6 million.
The analyst also upped his Q3 aggregate EBITDA estimate (non-adjusted) to $189.3 million from $166.6 million, and core non-GAAP EPS estimate to $0.58 from $0.52. Consensus is $0.53, but the analyst said it's sure to move higher in the next 1-2 weeks.
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