Wedbush analyst Michael Pachter has upgraded the rating for movie theater operator AMC Entertainment (AMC) to Buy from Hold. Also, he raised the price target to $4 from $3. The upgrade reflects rising confidence in AMC’s ability to stabilize its business and improve its financial position. Following the upgrade, AMC stock surged over 9% on Friday.
Don’t Miss TipRanks’ Half-Year Sale
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
- Make smarter investment decisions with TipRanks' Smart Investor Picks, delivered to your inbox every week.
Key Reasons Behind the Upgrade
The upbeat view comes from expectations of a more “consistent release slate over the next several quarters” and AMC’s potential to gain market share in 2025 and 2026. This growth is expected to be driven by its premium screen offerings in North America and expansion plans in the UK and EU.
Further, the analyst believes that AMC has dealt with its immediate debt concerns by repaying or postponing all debt obligations due in 2026. He also thinks AMC is almost done issuing new shares, which should ease pressure on the stock.
Assuming a stabilized box office and recovering free cash flow, Pachter believes AMC stock should trade at an 8x Enterprise Value-to-EBITDA multiple, aligning with its historical average during periods of solid film releases.
Not Just AMC
Pachter also upgraded the rating on Cinemark (CNK) to Buy from Hold and increased the price target to $37 from $32. The analyst cited steadier movie releases, a big debt repayment next month that lowers debt by 20% with minimal impact on shares, and smart spending on laser projectors and new theaters as key reasons behind this move.
He also pointed out that Cinemark plans to return cash to shareholders in 2025 through dividends and likely stock buybacks.
Overall, Pachter believes CNK will hold its market share by tapping into its 30 million loyalty members and improving theater quality.
Is AMC Stock a Good Buy?
Turning to Wall Street, analysts have a Hold consensus rating on AMC stock based on seven Holds and one Sell assigned in the past three months. The average AMC price target is $2.93, implying a downside potential of 10.26%.
