Analyst firm Benchmark raised its growth estimates for AMC Entertainment Holdings Inc. Friday, citing better-than-expected domestic box office performance.
AMC
AMC,
reports its fiscal first-quarter results before market open on May 5. Benchmark now estimates that AMC will report first-quarter revenue of $912 million, up from its prior estimate of $831 million. Analysts surveyed by FactSet are looking for first-quarter revenue of $930 million.
“Domestic box office exceeded our expectations,” Benchmark analyst Mike Hickey wrote in a note released Friday. The analyst firm also raised its estimate for adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) to a loss of $37 million from its prior estimate of an $86 million loss. Analysts surveyed by FactSet are looking for an EBITDA loss of $33 million. Benchmark has a hold rating for AMC.
Shares of the movie-theater chain and meme-stock darling fell 0.2% before market open Friday. The stock ended Thursday’s session down 2.6%, compared with the S&P 500’s
SPX,
decline of 0.6%.
Related: AMC boosted by rebound in foot traffic and Gen Z visits, research finds
In a recent report, analytics company Placer.ai noted that cinema attendance has climbed significantly since January 2021, when the cinema industry was wrestling with the disruption caused by the COVID-19 pandemic. As of February 2023, attendance is tracking at more than 322% above January 2021’s level, according to the research.
AMC is also looking to resolve its proposed conversion of AMC Preferred Equity
APE,
units into common stock. “AMC shareholders recently approved combining AMC shares and APE units and a 1:10 reverse stock split,” Hickey wrote in the note. “To necessitate the transactions, AMC will need a favorable judicial ruling on the litigation settlement.”
In a filing on April 3, AMC announced a settlement that opens the way for the stock conversion, alongside a 10-to-1 reverse stock split and the capacity to sell more shares. The move is part of the company’s ongoing battle to eliminate debt, but it has faced court proceedings.
Read more: Latest twist in AMC APE stock-conversion saga more of a ‘hurdle’ than a ‘roadblock’: analyst
A judge subsequently denied AMC’s attempt to quickly resolve the court fight.
Benchmark’s Hickey expects AMC to raise capital as soon as the settlement is resolved. “We think AMC will immediately tap the capital markets on a successful transaction,” he wrote. “The capital raise would likely be used to provide relief to AMC’s significant net debt obligations.”
At the end of 2022, AMC’s total aggregate principal debt amounted to approximately $4.95 billion, down from $5.17 billion at the end of 2021.
AMC describes itself as the largest movie-theater company in the world, with approximately 950 theaters and 10,500 screens across the globe.
Over the past two years, AMC has been on a roller-coaster ride that took it from beleaguered pandemic victim to meme-stock phenomenon. AMC’s stock is up 22.1% in 2023, outpacing the S&P 500’s 7.6% gain, while the APEs have risen 6.4%.
