Analysts Cut Fourth-Quarter Box Office Estimates

NEW YORK - The box office is down 6.0 percent so far in the fourth quarter, and "it will be difficult for the remaining few weeks to make up for the slow start to the quarter," Barclays Capital analyst Anthony DiClemente said in a report Friday. He became the latest Wall Street observer to cut his box office expectations for the final quarter of the year.

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Even though 30 percent of the fourth quarter's grosses are typically generated in the final three weeks of the year, he said he is now looking for a "flattish" box office quarter, down from the 7 percent-8 percent gain that he had previously forecast.

As a result, he also reduced his fourth-quarter financial estimates for movie theater groups Regal Entertainment Group and Cinemark.

"The film slate looks strong in the last two weeks of the year, and we are most excited for Sherlock Holmes 2, Mission Impossible 4 and The Girl with the Dragon Tattoo," DiClemente said. "However, the slate appears somewhat crowded, which could limit the collective box office potential of these films in the fourth quarter. The silver lining here is that these films could have longer "legs" and there could be greater spillover into the first quarter."

Similarly, Wedbush Securities analyst Michael Pachter earlier in the week had reduced his outlook for the box office this quarter to about flat. "We think box office will be strong for the remainder of the quarter, driving overall box office to roughly flat year-over-year, but still lower than we had previously estimated, he said in adjusting his earnings estimates for Regal, Cinemark and Carmike Cinemas.

He rates Regal shares at neutral with a  $14 price target, Cinemark, which he rates neutral with a $24 target, and Carmike at outperform with a $10 target.

And Lazard Capital Markets analyst Barton Crockett this week also lowered his quarterly forecast for the overall box office and Regal. "We had assumed 10 percent domestic box office growth for the industry in the fourth quarter," he wrote. "It’s now clear our estimate was too high." He moved to a forecast of a 1.6 percent improvement.

Late last week, Stifel, Nicolaus analyst Benjamin Mogil had lowered his quarterly expectations for the movie industry. "Our new estimate assumes that December's box office is up 8.6 percent over last year, but not enough to pull the quarter to break-even," he wrote.

Email: Georg.Szalai@thr.com

Twitter: @georgszalai