Shares of AMC Entertainment (NYSE: AMC) climbed over 38% this week after the cinema chain operator announced the release of several major titles that are expected to drive sales up this year.
Fundamental analysis: Huge loss announced; rebound expected
The coronavirus pandemic has plagued the film sector in 2020 and forced AMC and rivals to raise new money to avoid bankruptcy. However, analysts expect AMC’s revenue to more than double in 2021.
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“For all the talk of the steps we at AMC have taken to bolster our position, the real salvation of our company will be because of vaccination,” said AMC Chief Executive Officer Adam Aron.
The movie theater company said implementing coronavirus safety protocols in cinemas encouraged over 8 million moviegoers to return to cinemas in Q4.
AMC said that a number of major film releases that were delayed would come to cinemas from May onwards, including “Godzilla vs. Kong”, “Top Gun: Maverick”, “Black Widow” and “F9”, expected to significantly boost sales.
AMC reopened the majority of theaters, with around 90% of its cinemas in the U.S. being open as of Friday. Theaters in Europe are expected to return to service in time for the new movie releases.
Still, analyst Richard Greenfield initiated coverage of AMC shares with a “Sell” rating and 1-cent price target.
“There is a substantial disconnect between the future of aggregate movie theater attendance and in turn AMC’s earnings power relative to its current enterprise value and over-levered capital structure,” the analyst said.
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Technical analysis: AMC stock is worth $0.01, says analyst
AMC stock more than doubled in price over the past 12 months, with the recent rally coming thanks to a group of Reddit investors who collaboratively boosted a handful of stocks in January including AMC, GameStop, and more.
AMC stock price gained about 8.5% on Friday to increase the total weekly gains to over 38%. The price action stopped near $12.00 where the 200-DMA is located and this technical indicator will continue to offer resistance. On the downside, the horizontal line of $9.50 will offer support in case a pullback takes place.
AMC stock price surged this week after the movie theater chain said coronavirus vaccine rollouts and the upcoming release of several new titles are expected to boost sales in 202