Barclays on U.S. Media: Monthly Movie Mail: Box Office Not 'Immortal,' Lowering Estimates
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Rating Summary:
5 Buy, 15 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 12 | Down: 15 | New: 40
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Barclays on U.S. Media: Monthly Movie Mail: Box Office Not 'Immortal,' Lowering Estimates
Analyst, Anthony J. DiClemente, said, "Quarter-to-date, the box office is down 6.0%, with attendance down an estimated 5.2% and ticket prices down an estimated 0.8%. While the 4Q is heavily back-end loaded (30% of the quarter's grosses are generated in the last 3 weeks of the year), we believe it will be difficult for the remaining few weeks to make up for the slow start to the quarter."
"Crowded film slate limits 4Q upside, but bodes well for 1Q. The film slate looks strong in the last two weeks of the year and we are most excited for Sherlock Holmes 2, Mission Impossible 4, and The Girl with the Dragon Tattoo. However, the slate appears somewhat crowded, which could limit the collective box office potential of these films in the 4Q. The silver lining here is that these films could have longer "legs" and there could be greater spillover into 1Q12."
"Lowering estimates; now looking for a flattish 4Q box office, vs. +7-8% Y/Y previously. By our math, the December box office would have needed to be +34% Y/Y to meet our prior estimates, a challenging and unlikely event, in our view..."
Regal (NYSE: RGC) (OW-rated, PT $14): Lowering 4Q revenue to $660M and adjusted EBITDA to $115M. We assume +0.5% growth in attendance per screen and -0.8% growth in ticket prices. We assume no margin expansion as Regal begins to comp against its recent cost initiatives this quarter.
Cinemark (NYSE: CNK) (EW-rated, PT $24): Lowering 4Q revenue to $540M and adjusted EBITDA to $115M. Domestically, we used similar per screen assumptions for CNK as we did for RGC. Internationally, we are leaving our estimates unchanged. We believe the LatAm business remains strong even though it is comping against Elite Squad 2 in Brazil, the country's highest grossing film of all time.
National Cinemedia (Nasdaq: NCMI): More insider buying, but multiple likely to be constrained. NCMI CEO Kurt Hall bought roughly $350,000 of stock in November at a weighted average price of $12.65. This brings Hall's total buying activity since August 2011 to more than $800,000. While this insider activity is encouraging, we believe NCMI's multiple will be constrained given the limited visibility on 2012 and given its heavy advertising exposure (85%+ of revenues).
Analyst, Anthony J. DiClemente, said, "Quarter-to-date, the box office is down 6.0%, with attendance down an estimated 5.2% and ticket prices down an estimated 0.8%. While the 4Q is heavily back-end loaded (30% of the quarter's grosses are generated in the last 3 weeks of the year), we believe it will be difficult for the remaining few weeks to make up for the slow start to the quarter."
"Crowded film slate limits 4Q upside, but bodes well for 1Q. The film slate looks strong in the last two weeks of the year and we are most excited for Sherlock Holmes 2, Mission Impossible 4, and The Girl with the Dragon Tattoo. However, the slate appears somewhat crowded, which could limit the collective box office potential of these films in the 4Q. The silver lining here is that these films could have longer "legs" and there could be greater spillover into 1Q12."
"Lowering estimates; now looking for a flattish 4Q box office, vs. +7-8% Y/Y previously. By our math, the December box office would have needed to be +34% Y/Y to meet our prior estimates, a challenging and unlikely event, in our view..."
Regal (NYSE: RGC) (OW-rated, PT $14): Lowering 4Q revenue to $660M and adjusted EBITDA to $115M. We assume +0.5% growth in attendance per screen and -0.8% growth in ticket prices. We assume no margin expansion as Regal begins to comp against its recent cost initiatives this quarter.
Cinemark (NYSE: CNK) (EW-rated, PT $24): Lowering 4Q revenue to $540M and adjusted EBITDA to $115M. Domestically, we used similar per screen assumptions for CNK as we did for RGC. Internationally, we are leaving our estimates unchanged. We believe the LatAm business remains strong even though it is comping against Elite Squad 2 in Brazil, the country's highest grossing film of all time.
National Cinemedia (Nasdaq: NCMI): More insider buying, but multiple likely to be constrained. NCMI CEO Kurt Hall bought roughly $350,000 of stock in November at a weighted average price of $12.65. This brings Hall's total buying activity since August 2011 to more than $800,000. While this insider activity is encouraging, we believe NCMI's multiple will be constrained given the limited visibility on 2012 and given its heavy advertising exposure (85%+ of revenues).
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