AMC Entertainment (AMC) In Need of Blockbuster to Bolster Recovery - Macquarie Research

Macquarie analyst Chad Beynon reiterated a Neutral rating and $5.00 price target on AMC Entertainment (NYSE: AMC) citing strong Pre-COVID results, pent up demand, as well as much concern over leverage and rent burden. AMC is in need of a big blockbuster movie to serve as a catalyst to recovery, the analyst stated.

The analyst stated "We are encouraged by the strong start to the year (pre-COVID) and by early anecdotes of pent-up demand from the consumer industry. However, we remain concerned over leverage and the rent burden, as we highlighted in our downgrade note. The balance sheet will be in tough position throughout 2020 and not in a much better place by YE21 at 8.8x. Debt reduction will be a focus going forward, inhibiting AMC’s ability to invest in growth initiatives and defend market share. In addition, AMC is working with landlords to find solutions for its ~$950m in annual rent it is having trouble paying on top of ~$300m annual interest expense. On a positive note, the company is committed to cost reductions in a low revenue environment where typically low occupancy levels at theatres will not be heavily impacted by social distancing guidelines."

For an analyst ratings summary and ratings history on AMC Entertainment click here. For more ratings news on AMC Entertainment click here.

Shares of AMC Entertainment closed at $5.99 yesterday.

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