Despite ongoing weak fundamentals, AMC Entertainment (NYSE:AMC) shares have often been propped up on account of its meme stock status. However, the movie-theater chain’s latest quarterly results were not enough for the retail crowd to get on board this time around.
In Q4, revenue fell by 15.3% from the same period a year ago to $990.9 million, yet coming in ahead of Street expectations by $13.24 million.
Despite the release of blockbusters such as “Avatar: The Way of Water,” given a large release slate hole earlier in the quarter, the company experienced a 17% drop in attendance rates to 49.6 million. In fact, the theater footprint only reached 54% of pre-covid 4Q19 levels.
For the 14th straight quarter (and fourth year in a row), the company recorded a loss. On an adjusted basis, EPS came in at a net loss of -$0.14, a worse showing than the loss of 6 cents posted during the same period a year ago.
While that figure also beat Street expectations, with the company’s results indicating a return to pre-covid levels is not about to happen anytime soon – and Chief Executive Adam Aron stressing the company is “by no means are we out of the woods yet” – investors digested the results and sent shares down in the subsequent session.
Wedbush’s Alicia Reese believes the company has “the cash to continue operating through an improved theatrical environment in 2023” and thinks it stands to benefit from the better conditions.
“We modeled improving box office in 2023, leveraging off of AMC’s high fixed costs to deliver positive EBITDA margins in the year, ending with an estimated 7.5% for FY:23 and rising to 9.5% adjusted EBITDA margin in FY:24 and 10.5% in FY:25,” Alicia went on to say.
However, the analyst still thinks the shares are significantly overvalued. As such, Reese rates AMC stock an Underperform (i.e. Sell) and backs it up with a $2 price target. Should the target be met, investors are looking at 69% collapse from current levels. (To watch Reese’s track record, click here)
Other analysts are no more upbeat; with 2 Holds and Sells, each, the stock boasts a Moderate Sell consensus rating. A year from now, shares are expected to be trading 64% lower, considering the average price target currently stands at $2.33. (See AMC stock forecast on TipRanks)
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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.
