July 17, 2017
Exhibition Stocks Fall Again After Weaker Than Expected Weekend Box Office
The Monday drop in exhibition company stocks, following weaker than expected domestic box office sales, is becoming a weekly event as Wall Street’s bearish view of the business grows more grizzly.
This morning stock prices for all of the major chains are down with the two largest — AMC Entertainment and Regal Entertainment — touching 52-week lows.
AMC is off 8.2% in early trading with Regal -1.8%, Cinemark -2.2%, and Imax -1.6%. Cinema ad sales company National Cinemedia, -1.3%, also touched a 52-week low.
RBC Capital Markets’ Leo Kulp contributed by dropping his 12-month price target for AMC by 21% to $30 — about $10 more than it’s selling for today.
Although he hasn’t lowered his box office forecast for the year just yet, “at this point, we believe there is likely more downside than upside to our 3Q industry box office estimate,” he says.
Benchmark’s Mike Hickey says that the top 10 films in the quarter that began this month have accounted for $652 million in box office sales, which is down 7% vs the same period last year. And he predicts that this weekend, which will include Dunkirk, “will be down 9% compared to prior year that included the release of Star Trek Beyond.”
MKM Partners’ Eric Handler also is concerned, predicting that Q3’s box office sales will come in 6% below last year.
“We continue to see August as the most difficult comparison for the quarter as nothing in this year’s line-up appears able to compete with the success of last year’s anti-super hero film Suicide Squad,” he says. “In order for August to come somewhat close to last year, the box office will need to see a break-out hit from a film like Atomic Blonde, The Dark Tower, The Hitman’s Bodyguard or Logan Luck.”
Over the last three months AMC’s market value has fallen about 34%, with Imax -35%, Regal -15%, and Cinemark -14%.