Pass The Popcorn: AMC Makes Case That People Still Go To The Movies

The Big Screen is still big.

Imperial Capital analysts came away from AMC Entertainment Holdings Inc AMC's investor day with a renewed sense of the relevance the old-school movie theater has in today’s entertainment world and reiterated a bullish stance on the stock. 

The Analyst

David Miller maintained an Outperform rating on AMC with a $23 price target. 

The Thesis

Over the last two decades, the DVD player and the DVR came into homes, and then streaming services like those from Netflix, Inc. NFLX and Amazon.com, Inc. AMZN quickly became ubiquitous. 

But the AMC investor day last week served as a reminder that the good, old-fashioned movie theater is doing just fine, Miller said in a Monday note. (See the analyst's track record here.) 

Cinema revenue has grown at an annual average rate of 2.4 percent since 1998 and at an even higher rate of 6 percent internationally, Miller said.

“Further, against the notion that younger people do not go to the movies anymore, more teens and tweens are going to the theater than ever before, with 92 percent of AMC’s paying guests between the ages of 12 and 24." 

AMC made a compelling case that people who stream a lot of movies also still go to the movies a lot, Miller the analyst said. 

Growth in AMC’s membership program has grown in 18 months from zero to 750,000 members, according to Imperial Capital. 

Price Action

Despite the positive note from Miller, AMC shares were falling by 2.8 percent to $15.60 at the time of publication Monday.

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