AMC Entertainment Holdings Inc. enjoyed a boost from\u00a0Taylor Swift and Beyonc\u00e9\u2019s concert films\u00a0in its\u00a0fourth-quarter results Wednesday, but the company now faces a \u201cbumpy\u201d year, according to analyst firm Wedbush.<\/p>\n
In a note released Thursday, analyst Alicia Reese highlighted \u201cbig Swift share gains,\u201d adding that a \u201cbumpy 2024\u201d is under way.<\/p>\n
\u201cAMC\u2019s alternative content gave it a bump in [the fourth quarter] heading into a challenged [first half of 2024],\u201d she wrote, pointing to the impact of the Swift and Beyonc\u00e9 films. \u201c2024 will likely be tumultuous, with pockets of strength offset by volume holes.\u201d Wedbush estimates that AMC\u2019s 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.<\/p>\n
Related:<\/strong> AMC delivers revenue beat helped by Taylor Swift and Beyonc\u00e9, yet stock drops<\/a><\/p>\n 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\u2019s results, CEO Adam Aron described the writers and actors strikes as having \u201ccrippled<\/a>\u201d Hollywood.<\/p>\n Wedbush\u2019s Reese pointed to a \u201csoft slate\u201d of film releases through the first two months of AMC\u2019s fiscal first quarter, which will be partially offset by a strong March, with \u201cDune: Part 2\u201d likely outperforming on IMAX screens. \u201cAMC has the largest domestic footprint of IMAX screens,\u201d she noted.<\/p>\n Related:<\/strong> AMC CEO sends Taylor Swift \u2018eternal gratitude\u2019 as Eras Tour concert film makes history<\/a><\/p>\n \u201cDune: Part 2,\u201d staring Timoth\u00e9e 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<\/a>.<\/p>\n \u201cThe January\/February box office was down 45% vs. 2019, but it was likely the most difficult period of the year,\u201d Reese said in her note. \u201cWe expect a bumpy [second quarter], followed by easing headwinds in [the third quarter] and normalization by [the fourth quarter].\u201d<\/p>\n She added: \u201cAMC 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\u2019s heavy debt load and lack of dividends overshadow these positive factors, but AMC is focused on alleviating its debt.\u201d<\/p>\n Related:<\/strong>\u00a0This is what we can expect to see from meme stocks in 2024<\/a><\/p>\n AMC\u2019s 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\u2019s net debt is $3.75 billion, according to Wedbush.<\/p>\n 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. \u201cAMC\u2019s shareholders continue to resist AMC\u2019s 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,\u201d she wrote.<\/p>\n \u201cBy the share price reaction to AMC\u2019s print, AMC\u2019s shareholders were not pleased that AMC plans to continue issuing shares,\u201d Reese said. \u201cHowever, 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.\u201d<\/p>\n AMC shares are down 7.8% in premarket trading Thursday. The company\u2019s stock is down 25% over the last three months, while the S&P 500 Related:<\/strong> AMC\u2019s share price is \u2018so frustrating,\u2019 and strikes have \u2018ruined\u2019 early 2024 box office, CEO says<\/a><\/p>\n<\/p><\/div>\n<\/div>\n
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