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Bank Of America Downgrades AMC Entertainment, Says Stock 'Feeling A Little Frozen'

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Bank Of America Downgrades AMC Entertainment, Says Stock 'Feeling A Little Frozen'

Movie theater chain AMC Entertainment Holdings Inc (NYSE: AMC) remains well-positioned within the exhibition marketplace but the bearish case for the stock can still be made, according to Bank of America.

The Analyst

Bank of America analyst Bryan Goldberg downgraded AMC Entertainment from Neutral to Underperform with a price target lowered from $14 to $7.

The Thesis

The box office environment in the fourth quarter was "sluggish" with only one notable success story, Walt Disney Co's (NYSE: DIS) "Frozen 2," Goldberg wrote in a note. The release of "Star Wars" could improve sentiment but trends will likely deteriorate throughout 2020. In fact, the industry is up against difficult year-over-year comparisons with multiple 2019 hits including "Captain Marvel," "Avengers: Endgame," "Toy Story 4," and "The Lion King."

Other factors that contributed to the downgrade include intense competition against "small screen competitors" such as Netflix Inc (NASDAQ: NFLX) and the current dividend yield of nearly 10% could be cut in September.

AMC's capex could slow down in 2020, which Goldberg said bodes well for free cash flow in the coming year. However, a declining long-term EBITDA is likely to prevent any deleveraging in the near term. As such, the stock is now "feeling a little Frozen."

Price Action

Shares of AMC Entertainment traded lower by 3% at $7.85 at time of publication.

Related Links:

As 'Frozen 2' Arrives, Here's A Look Back At The Massive Success Of 'Frozen'

'Frozen 2' Continues To Bring The Heat, Disney Continues To Set Box Office Records

Latest Ratings for AMC

DateFirmActionFromTo
Dec 2019DowngradesNeutralUnderperform
Nov 2019MaintainsBuy
Oct 2019MaintainsOutperform

View More Analyst Ratings for AMC
View the Latest Analyst Ratings

Posted-In: Bank of America Bryan Goldberg Frozen 2 moviesAnalyst Color Downgrades Price Target Analyst Ratings Best of Benzinga

 

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Latest Ratings

StockFirmActionPT
AIVBMO CapitalDowngrades
RNGWells FargoInitiates Coverage On240.0
INSPOppenheimerInitiates Coverage On50.0
ESSBMO CapitalDowngrades
ORNational Bank of CanadaUpgrades
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