Wishpond
Trending >

CGX stock price target lowered at Scotia

cineplex VIP

Following the sale of a “non-core” asset, Scotia Capital analyst Maher Yaghi has lowered his price target on Cineplex (Cineplex Stock Quote, Chart, News, Analysts, Financials TSX:CGX).

On November 22, CGX announced it had sold its Player One Amusement division to OpenGate Capital for $155-million.

“We proudly built the P1AG business, through several acquisitions and organic growth, to become a North American leader in amusement gaming solutions which has delivered strong, consistent results, especially coming out of the pandemic. As we continue to focus on our growth plan, the strategy to divest P1AG came at an opportune time to strengthen our balance sheet,” CEO Ellis Jacob said. “We thank the talented employees of P1AG, and we look forward to working with them as a commercial partner and supplier to Cineplex going forward.”

As reported by the Globe and Mail, Yaghi on November 24 maintained his “Sector Perform” rating on CGX stock but lowered his price target on the stock from $12.50 to $11.75.

“When Cineworld entered into an agreement to purchase all issued and outstanding shares of CGX in 2019, the P1AG business was quickly seen as a non-core asset,” the analyst explained. “Hence, Cineworld’s objective was to quickly sell this asset to focus on the movie theatre business. However, Cineworld’s search for a buyer came to a halt when the pandemic unexpectedly took centre stage in March 2020 and the deal fell through. Although selling P1AG was considered before, we believe that the sale to OpenGate now is positive because it will allow the company to focus on higher revenue-generating assets in its core business. This comes at a good time given that the company has mostly recovered to pre-pandemic levels and the entertainment strikes in Hollywood are behind us. Simply put, we think the sale is an opportunity for CGX to strategically prioritize and execute on what works well, which could make the company more attractive down the road.”

At press time, shares of Cineplex were down 0.7 per cent to $8.29.

We Hate Paywalls Too!

At Cantech Letter we prize independent journalism like you do. And we don't care for paywalls and popups and all that noise That's why we need your support. If you value getting your daily information from the experts, won't you help us? No donation is too small.

Make a one-time or recurring donation

About The Author /

insta twitter facebook

Comment