AMC Entertainment Holdings Inc. enjoyed a boost from Taylor Swift and Beyoncé’s concert films in its fourth-quarter results Wednesday, but the company now faces a “bumpy” year, according to analyst firm Wedbush.

In a note released Thursday, analyst Alicia Reese highlighted “big Swift share gains,” adding that a “bumpy 2024” is under way.

“AMC’s alternative content gave it a bump in [the fourth quarter] heading into a challenged [first half of 2024],” she wrote, pointing to the impact of the Swift and Beyoncé films. “2024 will likely be tumultuous, with pockets of strength offset by volume holes.” Wedbush estimates that AMC’s North American box office will end 2024 down 7% year over year at $8.3 billion, after a 21% year-over-year rise in 2023. However, the analyst firm expects 2025 box office to rise 20% year over year, noting that many 2024 titles were delayed after the long writers and actors strikes.

Related: AMC delivers revenue beat helped by Taylor Swift and Beyoncé, yet stock drops

Wedbush maintained its neutral rating and $6 price target for the movie-theater chain and original meme stock. Of seven analysts surveyed by FactSet, four have a hold rating and three have a sell rating for AMC

Speaking during the conference call to discuss AMC’s results, CEO Adam Aron described the writers and actors strikes as having “crippled” Hollywood.

Wedbush’s Reese pointed to a “soft slate” of film releases through the first two months of AMC’s fiscal first quarter, which will be partially offset by a strong March, with “Dune: Part 2” likely outperforming on IMAX screens. “AMC has the largest domestic footprint of IMAX screens,” she noted.

Related: AMC CEO sends Taylor Swift ‘eternal gratitude’ as Eras Tour concert film makes history

“Dune: Part 2,” staring Timothée Chalamet and Zendaya, opens Friday. The sci-fi epic, whose release was pushed from November as a result of the actors strike, could enjoy a $150 million to $175 million global opening, according to the Hollywood Reporter.

“The January/February box office was down 45% vs. 2019, but it was likely the most difficult period of the year,” Reese said in her note. “We expect a bumpy [second quarter], followed by easing headwinds in [the third quarter] and normalization by [the fourth quarter].”

She added: “AMC expanded its market share in 2023 and can expand further from its 22.5% market share with its vast network of premium large-format screens and concert movie distribution. AMC also has an opportunity to drive revenue growth from its European circuit with theater upgrades that would boost per-screen averages. The company’s heavy debt load and lack of dividends overshadow these positive factors, but AMC is focused on alleviating its debt.”

Related: This is what we can expect to see from meme stocks in 2024

AMC’s total debt including finance leases at the end of 2023 was around $4.56 billion, down from $5.01 billion at the end of 2022, the company said in its earnings release. The company’s net debt is $3.75 billion, according to Wedbush.

Reese noted that AMC raised over $865 million from equity sales in 2023 and will continue to do so as the box-office slate remains depressed through the first half of 2024. “AMC’s shareholders continue to resist AMC’s share repurchases, but AMC must cover its interest payments and leases while chipping away at the $3 billion in debt repayments coming due over the next three years while renegotiating the rest,” she wrote.

“By the share price reaction to AMC’s print, AMC’s shareholders were not pleased that AMC plans to continue issuing shares,” Reese said. “However, AMC must cover huge interest payments and leases while preparing for debt repayments coming due over the next three years ($5 million in 2024, $98 million in 2025, $2.9 billion in 2026, and $525 million in 2027). We expect AMC to renegotiate debt terms for its highest balance debt before 2026, at least extending maturities, if not also reducing rates.”

AMC shares are down 7.8% in premarket trading Thursday. The company’s stock is down 25% over the last three months, while the S&P 500
has gained 11.4%.

Related: AMC’s share price is ‘so frustrating,’ and strikes have ‘ruined’ early 2024 box office, CEO says


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