Cinemark Vs. AMC: Analyst Weighs In On Theater Stocks

Summer blockbuster movie season is still several months away, but one Wall Street analyst gave investors a sneak preview of what to expect from two popular movie theater stocks on Tuesday.

The Analyst

MKM Partners analyst Eric Handler reiterated his Buy rating and $47 price target for Cinemark Holdings, Inc. CNK. He also reiterated his Neutral rating for AMC Entertainment Holdings Inc AMC but lowered his price target from $19 to $15.

The Thesis

AMC will have some hurdles to clear in 2019, Handler said. While the outlook for the U.S. box office this year is positive overall, Handler has some concerns about the UK market for AMC. In 2018, AMC reported 3.4 percent growth in UK revenue and record UK attendance thanks several UK-centric movies, including “Bohemian Rhapsody,” “Peter Rabbit” and “Mary Poppins Returns.” Handler said AMC will have a tough time with those comps in 2019.

At the same time, Handler is bullish on Cinemark and said the company’s MovieClub service should help generate industry-leading 2019 U.S. attendance growth.

“A likely high-single digit dividend increase (for a fourth consecutive year), when year end earnings are announced towards the end of the month, also furthers the appeal of an attractive income stream for investors,” Handler wrote in the note. Cinemark already pays a 3.5 percent dividend yield.

Handler said Brazil, which accounts for about 45 percent of Cinemark’s international revenue, is off to a hot start to 2019, generating 14 percent constant-currency revenue growth in the month of January. That growth included a 12 percent jump in attendance and a 2 percent increase in pricing.

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