'Fast and Furious' Box-Office Win Offers Hope for Movie Theater Stocks -- Barrons.com
11:31 am ET May 24, 2021 (Dow Jones) Print
By Connor Smith
American moviegoers will have to wait until June to see Fast and Furious 9, but a strong debut overseas has the remaining movie theater bulls buzzing.
The film's international debut brought in $162.4 million in total box office sales, according to media reports, across eight international markets including China, South Korea, and Hong Kong. The bulk of those box office sales came from China, where it racked up $135.6 million. B. Riley analyst Eric Wold wrote Monday that the film's strong debut reinforces his view that movie theaters are primed for a recovery this summer.
AMC Entertainment Holdings stock (ticker: AMC) was up 13% to $13.64 Monday. Shares of IMAX ( IMAX) were up 2.5% to $21.90, while Cinemark Holdings stock (CNK) was up 3.1% to $22.43.
"We believe the momentum underlying the global exhibition industry in recent weeks and months, including strong film openings (against capacity headwinds), upcoming film slate stabilization, additional studio/exhibition window agreements and solidified balance sheets provides an attractive setup for the stocks of the group to move higher into year-end," Wold wrote.
Wold points to coming installments in 2021 from film powerhouses such as Marvel, as well as sequels to hits such as The Suicide Squad, Top Gun, and The Conjuring, which could see strong demand as more of the world reopens.
Wold maintained a Buy rating and $16 price target on AMC stock. He's the only analyst listed by FactSet who has a Buy rating on AMC shares. The mean price target for AMC sits at $4.86, according to FactSet.
Wold also has Buy ratings on theater firms Cinemark Holdings, IMAX, Marcus (MCS), and National CineMedia (NCMI).
AMC stock has attracted attention from retail investors, including many on Reddit's WallStreetBets forum. Such users latched on to AMC in January amid a broader squeeze in stocks that hedge funds bet against. AMC's short interest remains elevated, and such users are betting on a far bigger squeeze event as theaters reopen. AMC says it had more than 3 million individual shareholders at last count, with none holding more than a 10% stake.
To its credit, AMC has capitalized on the attention by selling shares and bolstering its balance sheet to weather shutdowns and prepare for a larger reopening.
On the flip side, some large AMC investors have cashed out. The latest was Wanda Group, AMC's largest shareholder. Wanda Group sold most of its remaining shares, AMC said on Friday. Wanda Group briefly owned all of AMC until it brought the movie theater company public in 2013.
Meanwhile, Colliers Securities analyst Steven Frankel used the F9 debut to reiterate his Buy rating and $25 price target on IMAX. He notes that IMAX saw a roughly 8.6% share of the total box office for F9's overseas opening weekend, and a 9.1% share in China. That was the highest share for a Fast and Furious film for IMAX since 2013 when it grabbed 8.8% of the total ticket sales.
"Clearly, there are near-term challenges, but at some point Imax is positioned to benefit from pent-up demand and a slew of high-profile releases," Frankel wrote. "Imax continues to play a critical role in the entertainment ecosystem, with strong relationships with Hollywood's most influential artists, studios and exhibitors creating an experience that is highly valued by consumers."
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