For a while there, it was looking like the final curtain for the entire movie theater concept. The vague, emotional notion of the “cinema experience” could only go so far in light of rising prices and declining service. Then the pandemic started, and that might have been the end of the whole thing. But a comeback followed, and now, Cineplex (TSE:CGX), one of Canada’s leading movie theater chains, is seeing a light at the end of the tunnel. However, investors aren’t so sure and sent shares down nearly 2% in Friday afternoon’s trading.
Cineplex had reason to stand up and cheer. December’s box office revenues alone reached C$52 million, with the fourth quarter as a whole hitting C$124 million. That was about 32% lower than what it was in 2019’s fourth quarter, suggesting that a return to form may not be far off. Several major productions, including “Taylor Swift: The Eras Tour,” “Five Nights at Freddy’s,” and “The Hunger Games: The Ballad of Songbirds and Snakes” combined to bring home exciting results for the chain. While revenues dipped slightly from October to November, they shot up substantially in December, which can be attributed to favorable weather and some good releases.
Things Don’t Look as Promising in 2024
However, there’s a downside here and one that might seem familiar to long-time movie buffs. The “January Curse,” or when Hollywood basically dumps the garbage that it’s contractually obligated to produce and release, resulting in sub-par performance when coupled with bad weather, looks to be in full effect and may extend well into spring this year. Theaters need home runs and quickly. They’ll be lucky to get bunts. A Deadline report suggests that the U.S. box office will drop by $1 billion in 2024 thanks to delayed releases from the writers’ and actors’ strikes of 2023 and an increasingly annoyed moviegoing public. There are, however, 31 titles that provide a note of hope for 2024. Thus, only time will tell just how the whole thing goes.
Is Cineplex Stock a Good Buy Right Now?
Turning to Wall Street, analysts have a Strong Buy consensus rating on CGX stock based on five Buys and one Hold assigned in the past three months, as indicated by the graphic below. After a 2.1% gain in its share price over the past year, the average CGX price target of C$13.13 per share implies 63.83% upside potential.
