With shares of the movie chain operator continuing to rise, Citi revised its model for AMC Entertainment (NYSE:AMC) Holdings Inc. today. After rising 78.4% on Monday, AMC stock is up 52% in premarket trading on Tuesday.
AMC’s shares are up over 175% from Friday’s closing price. Citi analysts maintained their Sell rating on AMC stock and increased their price target from $3.10 to $3.20. The revision came after AMC’s revenue and adjusted EBITDA for the first quarter of 2024, which matched the preliminary findings that were made public on April 26.
According to the broker, Citi’s revised target price for AMC shares takes into account a scenario in which the business issues equity at the present share price in order to settle some of its debt.
Additionally, the valuation is based on an adjusted EBITDA ratio of roughly 7.5x enterprise value, which is in line with AMC’s three-year average multiple before the pandemic. Citi’s outlook is still negative despite the little increase in the target price, pointing to the overvaluation of AMC’s shares at the current market price.
The COVID-19 pandemic’s long-term effects on the movie theater business, which have resulted in closures all over the world and a large decline in box office receipts worldwide, have an impact on Citi’s Sell rating.
Citi highlights some of the industry’s problems, such as the proliferation of streaming services and the possible decline in the strategic significance of movie theaters.
AMC holds a prominent position in the theater exhibition industry. Mostly in North America, it runs about 9,40 theaters with about 10,500 screens. AMC’s operations are spread around twelve countries, highlighting its international presence in the sector.