Cineplex: Buy Rating Reaffirmed Amid Recovery and Growth Prospects

Cineplex (CPXGF – Research Report), the Communication Services sector company, was revisited by a Wall Street analyst today. Analyst Aravinda Galappatthige from Canaccord Genuity maintained a Buy rating on the stock and has a C$11.00 price target.

Aravinda Galappatthige has given his Buy rating due to a combination of factors including Cineplex’s potential for recovery and growth in the upcoming quarters. Despite a weaker-than-expected performance in the first quarter, largely attributed to a disappointing March box office, there is optimism for a rebound in the second quarter. This optimism is fueled by the strong opening of the Minecraft movie and a promising lineup of upcoming releases such as Thunderbolts and Mission: Impossible – The Final Reckoning.
Furthermore, Galappatthige anticipates improvements in Cineplex’s financial metrics, with expectations of increased box office revenues in the subsequent quarters, reaching closer to pre-pandemic levels. The potential for a future dividend announcement and share buybacks as the company’s leverage ratio improves also supports the Buy rating. Although the price target was adjusted downward to reflect the softer Q1 results, the valuation remains attractive based on projected earnings and growth prospects.

In another report released today, National Bank also maintained a Buy rating on the stock with a C$13.50 price target.