Movie theaters’ post-pandemic recovery may soon (or already) be over, and that could have consequences for AMC Entertainment , according to Credit Suisse. The firm highlighted several warning signs about the cinema chain in a note Thursday morning, reiterating its underperform rating on the stock and its price target of 95 cents per share. On Tuesday, the stock closed at $6.64. “September and October box office levels are both down double-digits year-over-year, and 4Q22 is tracking fairly flattish year-over-year by our estimates, hardly inspiring confidence the industry is in the process of rapidly returning to pre-pandemic attendance levels,” the note said. Fourth-quarter attendance levels are tracking at about 66% of those seen in the same quarter in 2019, and box-office revenue should grow by just about 2%, Credit Suisse said. For next year, Credit Suisse sees a roughly 5% increase in 2023 box office revenue. This outlook includes an estimate for films not yet dated or released by smaller studios. Outside the movie theater-going experience, Credit Suisse also warned about studios’ production and customers’ viewing and streaming expectations. “We see little appetite among the major studios to ramp their medium-to-high budget releases beyond the levels already expected for 2023,” the note said. “Consumers will become more accustomed to films arriving on streaming after 45 days, and macro stresses are not encouraging for 2023, even for what has historically been a fairly defensive business.” In the near-to-mid term, “structural shifts” may be necessary for AMC to reach “reasonable” profitability – “be it a material reduction in sector screen counts, reduced operating lease levels, or incremental support from the studios via improved film splits or longer exclusive theatrical windows” – but to what extent is still unclear, the analysts added. — CNBC’s Michael Bloom contributed to this report.
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