Cinemark poised to reap the benefits of a better box office, says Wedbush, raising price target and estimates

By James Rogers

"Cinemark's domestic box office market share has remained elevated post-pandemic, and we do not expect that to materially change in 2024," wrote Wedbush analyst Alicia Reese.

Cinemark Holdings Inc. is well positioned for an improved box office as the movie theater industry recovers from the effects of last year's Hollywood writers' and actors' strikes, according to analyst firm Wedbush.

"Cinemark's post-pandemic recovery was humming until the SAG-AFTRA strike took the wind out of the box office sail," Wedbush analyst Alicia Reese wrote in a note released Thursday, adding that the tough industry dynamics that began in the fourth quarter of 2023 will likely last into the third quarter of this year.

However, Wedbush highlighted Cinemark's (CNK) strong performance, even amid a slower period for the broader movie-theater industry. "We think Cinemark will continue to outperform the industry, leveraging its heightened marketing capabilities to drive its 1.2 million loyalty members to its high-quality theaters more frequently while members spend more on concessions," Reese wrote. "Cinemark's domestic box office market share has remained elevated post-pandemic, and we do not expect that to materially change in 2024." Wedbush maintained its outperform rating for Cinemark and raised its price target to $23 from $20.

Related: Cinemark well-positioned for box-office rebound and market-share gains, says Benchmark

Citing a better box office, Wedbush raised its first-quarter revenue estimate for Cinemark to $563 million from $548 million. Analysts surveyed by FactSet are looking for revenue of $558 million. Wedbush also raised its Cinemark domestic revenue estimate to $443 million from $413 million but lowered its international estimate to $120 million from $135 million. "The titles that performed best this quarter were much better domestically than in Latin America (namely, Dune 2), as the family fare had a modest reception there relative to our high expectations," wrote Reese. Wedbush also raised its adjusted EBITDA forecast for Cinemark to $62 million from a prior estimate of $59 million.

Cinemark shares have gained 28.2% in 2024, outpacing the S&P 500 index's SPX gain of 4.7%. The stock is down 0.2% Friday, compared with the S&P 500's gain of 0.4%.

Earlier this month analyst firm Benchmark also noted that Cinemark is well-positioned for a box-office rebound and market-share gains. "We expect the first quarter of fiscal 2024 to represent the lowest point in performance for the year, with anticipated sequential growth across the remaining quarters of fiscal 2024," wrote Benchmark analyst Mike Hickey. "Looking ahead to 2025 and 2026, we think the box office is poised for significant growth, fueled by the return of a full slate of wide-release movies, providing a substantive growth catalyst." Benchmark has a buy rating and $22 price target for Cinemark.

Related: Cinemark's stock sees choppy trading after wider-than-expected loss but revenue beat

Cinemark also recently received a double upgrade from Wells Fargo to overweight. Wells Fargo also lifted its Cinemark price target to $23 from $13. Of 11 analysts surveyed by FactSet, six have a buy rating, four have a hold rating, and one has a sell rating for Cinemark.

In a separate note this week, Wedbush said that Cinemark rival AMC Entertainment Holdings Inc. (AMC) is well positioned to grow its market share and raised its estimates for the movie-theater chain and original meme stock.

AMC shares, which have enjoyed a recent rally, were up 8.4% Friday.

-James Rogers

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04-19-24 1116ET

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