AMC Entertainment shares bounce after B. Riley’s analyst turns bullish

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Shares of AMC Entertainment Holdings Inc. rallied on Monday after B. Riley’s analyst Eric Wold said it‘s time to buy, citing an improvement in the balance sheet outlook and a strong opening weekend. for ‘Godzilla vs. Kong ‘signaled a resurgence in demand. Cinema chain AMC shares, -8.33%, rebounded 4.9% in premarket trading, following a 32.8% drop in meme shares in the past two weeks.

Wold raised his rating to buy from neutral and raised his price target to $ 13, which is 39% above Thursday’s closing price, from $ 7. “We remain impressed with management’s ability to weather the headwinds. of the pandemic by strengthening the balance sheet and negotiating with the owners to improve the settlement track in 2022, ”Wold wrote in a note to clients. “And as the largest exhibitor in North America that also operates the largest number of IMAX displays, we believe AMC is well positioned to benefit from the projected resurgence of the industry and return to pre-pandemic attendance levels by 2023.” Also read: AMC lost nearly $ 1 billion this holiday season, but stocks are gaining as executives see better days ahead. The update comes after what Wold said was an “impressive” domestic box office opening weekend for Warner Bros. “Godzilla vs. Kong.” Warner Bros. is owned by AT&T Inc.’s T, + 0.66%. WarnerMedia. Don’t miss: ‘Godzilla vs. Kong ‘has the best box office debut since the pandemic began. Wold said that although the North American theater base is only 60% open and with seating capacity limitations averaging between 25% and 50%, the film still grossed about $ 48.5 million in revenue. national box office. That compares to the $ 47.8 million that opened “Godzilla: King of the Monsters” in May 2019. “We think consumers want to get out of the house and go back to the movies, and these results are very revealing, especially considering that the The movie was available free to HBO Max subscribers at the same time as the theatrical release, “Wold wrote. AMC investors have been on a roller coaster ride in recent months as stocks were thrown into a frenzy. trade surrounding very short stocks, which included GameStop Corp. GME stocks, + 0.86% Last two-week sell-off followed a five-week winning streak in which shares soared 149.2% That winning streak came after the stock lost more than half of its value (57.8%) in two weeks, after rising 525.5% in January. The stock closed 53.0% below the average on Thursday. closing maximum of more than two years of $ 19.90 on January 27, but it was still up 341.5% year-to-date, while the S&P 500 SPX index, + 1.18% had gained 7.0% over it. weather. B. Riley Wold said his only concern with AMC, and the reason for the previous neutral rating, was that the company’s high debt levels could put pressure on future cash flows. “However, as management increasingly indicates the ability and willingness to use capital to reduce debt burden, we can now be more constructive about the upside opportunity for equities,” Wold wrote.