Wedbush Reiterates Outperform On AMC Entertainment Ahead Of Q3 Earnings

Wedbush’s Michael Pachter believes there are several growth drivers for AMC Entertainment Holdings Inc AMC, which could lead to several years of adjusted EBITDA growth for the company.

Pachter maintains an Outperform rating on the company with a price target of $33.

Acquisitions

“We expect AMC to close on both the Carmike Cinemas, Inc. CKEC and Odeon transactions by year-end, and expect the Carmike acquisition to add $130 million in incremental 2017 EBITDA and Odeon to be mildly accretive in 2017,” the analyst mentioned.

Related Link: Loop Capital Initiates Coverage On AMC Entertainment Hldgs At Buy

Pachter expects the consolidated entity to deliver significant EBITDA growth in 2018, driven by the timing of the intended theater upgrades.

AMC Stubs

AMC Entertainment has also successfully rebuilt, AMC Stubs, its domestic marketing platform and has witnessed 42 percent membership growth in the first two months.

The analyst expects the company to increase its membership levels from 20 percent to 50 percent, thereby benefiting meaningfully from enhanced data utilization.

Expectations

“However, we expect solid results to be offset by average ticket headwinds, then difficult comparisons in Q4,” Pachter stated, while anticipated continued share losses in Q3, “as newly acquired screens underperform the greater circuit.”

The revenue, adjusted EBITDA and EPS estimates for FY16 have been raised, while the revenue adjusted EBITDA and EPS estimates for FY17 have been lowered.

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