Movie Theater Analyst on Reopening Plans: "Perfect Date May Never Arrive"

Getty Images (2); Courtesy of Business Wire

B. Riley FBR analyst Eric Wold cut his stock price target on AMC Theatres from $5 to $4, Cinemark Holdings from $16 to $14, and Imax Corp. from $19 to $18.

B. Riley FBR analyst Eric Wold in a Wednesday report lowered his stock price targets for movie theater operators and projected that the 2021 box office would fall about 20 percent below 2019 levels – when the domestic haul reached $11.4 billion and global revenue hit $42.5 billion, following the novel coronavirus pandemic.

He also argued that a gradual opening of cinemas, starting in markets where that is possible, could "bolster sentiment" among investors.

Wold cut his stock price target on AMC Theatres from $5 to $4, Cinemark Holdings from $16 to $14, and Imax Corp. from $19 to $18, with his target on cinema advertising firm National CineMedia dropping from $6 to $4.50.

The analyst in his report highlighted that he has in recent months expressed "concerns around a state of flux for the second-half 2020 film release calendar and the inability of major exhibition chains to reopen theaters profitably without new film content."

While he continues to believe that, he also wrote on Wednesday: "We are less certain that studios will wait for the perfect date to release their films — as that perfect date may never arrive. In other words, waiting for every major market to have optimal reopening rules for movie theaters (especially around capacity limits), may end up pushing most, if not all, titles into 2021. And if studios are concerned around the health of their exhibitor partners, they may not choose to wait much longer."

Wold on Wednesday forecast box office declines of about 75 percent in the third quarter and about 50 percent for the fourth quarter. "And then for 2021, we are projecting a roughly 20 percent box office decline for the full year — with weaker results earlier in the year and stronger results into the second half," he wrote. "We expect to see the group begin to trade on valuations based on 'normalized' levels in 2022" and beyond.