UPDATE: Benchmark Downgrades AMC Entertainment (AMC) to Hold
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(updated to add analyst comments)
Benchmark analyst Mike Hickey downgraded AMC Entertainment (NYSE: AMC) from Buy to Hold.
The analyst commented, "We are downgrading our rating to Hold from Buy as we suspect on-going material pressure from the COVID-19 situation to have a sustained negative impact on financial performance. In addition to the challenging near-term market environment from a presumed weak film slate, COVID-19 has forced theaters to close in France, Italy and the United States, and we remain concerned that we could see additional closures or negative influence from movie patron frequency within the impacted regions. We are also concerned about increased film development/release delays from Hollywood studios and OTT providers as well as the shutdown of MLB, NHL, NCAA, PGA, MLS and XFL sports franchises, ski areas, theme parks including Disneyland, concerts, festivals; from the growing necessity for social distancing. We anticipate that these headwinds are transitory and we expect a growth reset over the medium term, but we're increasingly concerned that AMC will have enough financial flexibility to cover a longer than anticipated slowdown or the potential for a complete shutdown of its theatrical network. The industry struggles with negative investor sentiment including competitive streaming services, negative attendance trends, film rent expense and dampened pricing power, all of which complicates investors willingness to look past near-term market contagions."
Shares of AMC Entertainment closed at $3.22 yesterday.
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