Cinemark Holdings, a prominent movie theater chain, saw its stock surge on Wednesday as an analyst revised their outlook, recognizing a recent dip in share price as a prime opportunity prior to the second-quarter earnings announcement.
In a report released on Wednesday, B. Riley Securities analyst Eric Wold upgraded his rating on Cinemark (ticker: CNK) from Neutral to Buy. Additionally, he raised the price target from $20 to $23 — a welcome update after his prior downgrade about a month ago.
During Wednesday trading, the stock saw a 3.7% increase to $16.53. In comparison, the S&P 500 rose by 0.6%, and the Dow Jones Industrial Average by 0.5%.
On June 14, Wold had downgraded Cinemark to Neutral from Buy while decreasing the price target to $20 from $21. This decision was primarily driven by the stock’s strong performance relative to its peers, including AMC Entertainment (AMC), Imax (IMAX), and Marcus Corp. (MCS). The analyst believed that Cinemark was quickly approaching its previous price target.
However, since then, Cinemark’s stock has experienced a 7.5% decline by Tuesday’s market close — a larger drop compared to its competitors over the same period, according to Dow Jones Market Data. This recent underperformance has opened up more room for the stock to appreciate and strive toward its new price target of $23, as stated by the analyst.
Cinemark Holdings continues to attract attention in the stock market, demonstrating potential for growth and providing investors with a promising entry opportunity ahead of the upcoming second-quarter earnings report.
Cinemark Expects Strong Q2 Results Amid Box Office Recovery
Cinemark Holdings, Inc. is set to announce its second-quarter financial results on August 4th. According to industry experts, the company is expected to outperform its competitors in the box office recovery post-pandemic, with a boost from the Latin America segment as demand returns. Financial analyst, Wold, predicts that second-quarter revenue and adjusted earnings before interest, tax, depreciation, and amortization will surpass market consensus.
Despite the challenges faced by movie theaters during the Covid-19 pandemic, Cinemark has shown promising progress. In the first quarter, the company reported a 30% increase in global customers, reaching a total of 43 million compared to the previous year.
Cinemark’s President and CEO, Sean Gamble, expressed optimism about the industry’s ongoing recovery, highlighting positive movie-going trends, a steady rise in film volume, and better-than-expected box office performance so far this year.
A majority of analysts surveyed by FactSet have a positive outlook on Cinemark’s stock. 58% rate it as a Buy, 33% as Neutral, and 8% as Sell.