Cineplex stock has price target lowered at National Bank

Following the reporting of its December box office figures, National Bank Financial analyst Adam Shine has lowered his price target on Cineplex (Cineplex Stock Quote, Chart, News, Analysts, Financials TSX:CGX)

On January 11, CGX reported that it had box office revenue of $52-million in December.

“It’s been a record year for Cineplex’s international programming. As part of our content broadening strategy, international content helped alleviate short-term supply challenges resulting from the now-resolved actors’ and writers’ strikes,” CEO Ellis Jacob said. “The start of 2024 is bringing with it the much-anticipated Dune: Part Two, Ghostbusters: Frozen Empire, Bob Marley: One Love, pop-culture movie favourite turned musical Mean Girls and international film Fighter.”

As reported by the Globe and Mail today, Shine says that while things are improving, the theatre business is not yet back to pre-pandemic levels.

“On an LTM [last 12-month] basis to Q3/23, theatre attendance was 71.4 per cent of 2019,” he said. “It will take time to get a clearer read on 2024 where H1, especially Q1, will be undermined by the effects of the strikes, but a steadier stream of film product ill start to occur in Q2 and strengthen through H2, with 2025 positioned to have the first full release slate since 2019. We assume attendance in 2024 at 68 per cent and 2025 at 78 per cent of 2019. We look for only modest growth in BPP which could do better. We’ve seen year-over-year forecasts for 2024 North American box office of flat to down 10 per cent. We come in at down 5 per cent in 2024 (was up 0.3 per cent) and up 15 per cent in 2025. We expect revenues of $1348-million ex-P1AG [Player One Amusement Group] (was $1264-million) in 2024 and $1537-million in 2025, with Adj. EBITDAaL of $160.5-million (was $193.8-million) in 2024 and $209.9-million in 2025.”

In a research update to clients January 16, Shine maintained his “Outperform” rating but lowered his price target from $13.50 to $12.50.