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Is Cinemark stock a buy? (June, 2024)

CNK stock

Increasing optimism around the upcoming box office has Roth MKM analyst Eric Handler upgrading Cinemark Holdings (Cinemark Holdings Stock Quote, Chart, News, Analysts, Financials NYSE:CNK).

In a research update to clients June 24, the analyst raised his price target on CNK from $19.00 to $26.00 while upgrading the stock from “Neutral” to “Buy”.

Handler says industry headwinds looks set to become “very attractive tailwinds”.

“We are increasingly optimistic about upcoming box office releases, especially the big “mega-franchises” slated in 2025/2026. Headwinds from Hollywood’s 6-month work stoppage in 2023 that weighed on the 1H24 release slate are easing,” the analyst wrote. “The 2Q box office should see a 30%+ decline, and while 3Q is projected to decrease 6%, improvements are being seen. Monthly revenue should turn positive in September and remain strong throughout 4Q, where we forecast 27% growth driven by blockbuster titles such as Joker: Folie a Deux, Venom: The Last Dance, Gladiator 2, Moana 2, Wicked, and Mufasa: The Lion King. The domestic box office could reach $9.4bn in 2025, (+15% vs our 2024 outlook, +6% vs 2023), and top $10bn (+6%) in 2026. Next year’s more normalized release slate is highlighted by mega-franchises Avatar 3 and Jurassic World, plus multiple Marvel titles (Captain America: Brave New World, Thunderbolts, Fantastic Four), and Superman: Legacy, Mission: Impossible -Dead Reckoning Part 2, Tron: Ares, and Wicked Part 2. The following year has more mega-franchise releases such as Super Mario Bros., Avengers, Star Wars (2 movies), Toy Story, The Batman, and Lord of the Rings.”

Handler thinks Cinemark will post EBITDA of $454.1-million on revenue of $2.87-billion in fiscal 2024. He expects those numbers will improve to EBITDA of $681.8-million on a topline of $3.29-billion in fiscal 2025.

“Our new $26 PT reflects: (1) a rolled forward 7x EBITDA valuation year to 2025 from our prior 2-year average (2024-2025); and (2) a reduced diluted share count for valuation purposes to 122mn, down from 152mn, which assumes Cinemark pays off its $460mn convertible note in cash. Over time, as the box office proves itself out and Cinemark moves forward with a capital return strategy, we believe multiple expansion is possible. Our 7x target EBITDA multiple is modestly below the midpoint of the exhibition industry’s 5.5x-9x historical trading range,” he concluded.

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About The Author /

Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.
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