- CreditSuisse Analyst Douglas Mitchelson downgraded Cinemark Holdings Inc CNK from Outperform to Underperform and lowered the target price to $9 from $25.
- Many industry participants have expressed optimism that the US box office will continue its post-pandemic recovery in 2023, but the analyst said he was doubtful.
- With the 2022 box office only two-thirds of 2019’s, he added he can understand why industry participants would hope that 2023 will be another step toward consumer behavior returning to pre-pandemic levels.
- The analyst disagrees as major studios are releasing fewer movies due to their focus on streaming, while box office legs are hampered by shorter exclusive cinema windows.
- Mitchelson expects negative long-term long-term trends to continue as streaming content and alternative entertainment options increase while price hikes crowd out potential customers.
- He added it was not clear if pre-pandemic habits would fully return.
- Mitchelson expects industry-wide domestic box office earnings to grow about 4% in 2023. In particular, he sees weakness in Q1 23 and Q4 23, while the summer of 2023 should erase gains.
- Mitchelson forecasts 4Q 22 domestic business to be flat below consensus.
- The analyst moved to estimates for Q4 2022 and 2023 EBITDA well below consensus.
- also read: What’s Happening to AMC Entertainment Stock Today?
- Price promotion: CNK shares are trading 5.33% lower at $9.85 on the latest check Wednesday.
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