Morgan Stanley Predicts 1% Movie Theater Attendance Decline in 2012

Empty Movie Theater - Generic Image - 2011
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Analyst Benjamin Swinburne also trims his fourth-quarter expectations and price targets for exhibitors Regal and Cinemark.

Amid a weaker-than-hoped year-end boxoffice performance so far, Morgan Stanley analyst Benjamin Swinburne slightly lowered his forecast for 2012 attendance to a 1 percent decline and trimmed his price targets on two big exhibitors he covers.
"Our initial build of the '12 slate points to U.S. attendance declines of 1 percent, modestly below our prior forecasts," he wrote.

He also cut his fourth-quarter box office forecasts for big theater groups Regal Entertainment, on whose stock he has an "underweight" rating, and Cinemark, on which he has an equalweight" rating, "due to weaker than expected attendance, leaving us below current [Wall Street] consensus."

"Despite two large weekends ahead, we now expect fourth-quarter boxoffice revenues to decline 1 percent-3 percent, driven by 2 percent-4 percent attendance declines," offset partially by higher pricing.

Swinburne reduced his price target on Cinemark shares from $23 to $21 and on Regal from $14 to $13.

"Currently, there are 20 direct sequels on the slate in '12, up from 16 this year," he highlighted. "Year-to-date, sequels have declined about 16 percent versus predecessors in the U.S. (versus -7 percent and +4 percent  in '10 / '09)."


Twitter: @georgszalai