Throughout the first half of 2021, an essentially new grouping of companies came to prominence. With the help of the internet, meme stocks periodically took off, at times shaking the foundations of the established capital market reality. AMC Entertainment Holdings, Inc. (AMC) rose to be one of the favorites, seeing meteoric growth in late-May. While many stocks were targeted as memes due to their high levels of short interest, AMC now has several tailwinds helping it stay afloat on its own. (See AMC Entertainment stock charts on TipRanks)
Eric Wold of Riley Securities is cautiously optimistic, writing about several positives for the company while assigning a far lower price target. Strong liquidity, brand loyalty, new theater openings, and a revenue beat on earnings all helped formulate the analyst’s opinion.
Wold reiterated a Hold rating on the stock, and declared a price target of $16. This potential 12-month target comes 52.66% less than the current share price. Despite his reasons for AMC growth, he believes the current valuation is still too high.
AMC successfully raised $1.8 billion in equity offerings during the first half of FY21, and now commands a formidable liquidity of about $2 billion. Wold sees this as an opportunity for management to address debt burdens and stabilize the company’s balance sheet.
While near-term headwinds from the ongoing Delta variant of the COVID-19 pandemic linger, the five-star analyst does not foresee them damaging the 2022-2023 return of the “pre-pandemic box office.” AMC has begun to open 12 new locations worldwide, and has been successful in using its leverage to eke out competition when negotiating theater leases.
Wold was encouraged by the 5% price hike in theater tickets and concessions, and expects customer volume to pick up as more films are released. The company has been expanding its market share through IMAX screen offerings, mobile concession and ticket ordering, and “efficient theater level operations.”
On TipRanks, AMC has an analyst rating consensus of Hold, based on 1 Buy, 4 Hold, and 3 Sell ratings. The average AMC Entertainment price target is $5.84, reflecting a possible 12-month downside of –82.72%. AMC closed trading Monday at a price of $33.80 per share.
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
