2023-07-12 09:16:46 ET
B. Riley Securities upgraded Cinemark ( NYSE: CNK ) shares to Buy from Neutral and raised its price target to $23 from $20.
B. Riley analysts noted that they acknowledge that the upgrade comes only about a month after they had downgraded Cinemark to Neutral from Buy, but the opinion change was based mainly on valuation as shares approached their price target, and they felt compelled to increase the valuation discount rate until they adjusted their 2024 estimates to reflect continued film slate risk emanating from the strike by the Writers Guild of America (WGA).
The analysts added that since the downgrade, Cinemark's stock has fallen ~13%, compared to an average decline of ~8% for the remaining three companies covered in the B. Riley Securities Exhibition Universe and the ~1% gain for the Russell 2000.
As the main reason for the downgrade was the exceptional YTD outperformance of Cinemark's stock versus the peer group and close proximity to the firm's prior price target, the underperformance of shares since that time now provides potential upside of ~44% to the new price target of $23, the analysts noted.
The firm added that it not only sees meaningful revenue and AEBITDA upside to its Q2 2023 estimates, but view Cinemark as having the best opportunity for upside results, compared to consensus estimates in the B. Riley Securities Exhibition Universe.
The analysts said that they remain confident in domestic industry recovery and that pandemic-driven Latin American circuit headwinds have reversed.
The focus has also returned to longer-term Latin American growth opportunity, according to the firm.
CNK +7.28% to $17.10 premarket July 12
More on Cinemark
- Cinemark Sees Continued Growth From Latin America, Subscription Verticals
- Cinemark Holdings: Summer Movie Season Essential For Recovery
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Cinemark stock rises after B. Riley switches back to Buy rating