AMC shares dim with silver screen luster; Macquarie downgrades

Reading International

01/09/2021 16:41

** Shares of AMC Entertainment  AMC.N  down 2.7% at $45.88;
Macquarie analyst downgrades stock to "underperform" from
"neutral" on box office concerns
    ** Macquarie analyst Chad Beynon cites product, shrinking
windows and Covid restrictions as reasons why domestic box
office performance hasn't recovered to pre-pandemic levels 
    ** While Beynon still likes Imax  IMAX.N  and Cinemark
 CNK.N , he sees AMC as "a riskier investment given rent
obligations, higher leverage and a difficult margin trajectory"
    ** Beynon expects 2021 U.S. box office revenue of $4.4 bln
for the year vs AMC's expectation for $5.2 bln and says AMC's
trading multiple of ~58 times 2022 consensus estimates compares
with a general multiple for 6-9x EBITDA.  
    ** While the stock is popular among retail investors who
talk it up on social media and Beynon kept his $6 price target,
the analyst says "fundamentals are nowhere near where shares are
trading" and he doesn't see AMC generating fresh cash flow until
2023
    ** Beynon also downgraded another cinema operator, Reading
International  RDI.O , to "neutral" from "outperform"

 (Reporting By Sinéad Carew and Lance Tupper)
 ((sinead.carew@thomsonreuters.com; +1 (646) 223 6186; Reuters
Messaging: sinead.carew.thomsonreuters.com@reuters.net
lance.tupper@tr.com))