Credit Suisse Downgrades Cinemark; Says 2023 Slate Not the Salve Theaters Hoped For

Credit Suisse analyst Douglas Mitchelson downgraded Cinemark Holdings Inc CNK from Outperform to Underperform and lowered the price target from $25 to $9.
Many industry participants have expressed optimism that the 2023 U.S. box office will continue its post-pandemic recovery, but the analyst said he is doubtful.
With 2022 box office at only two-thirds of 2019, he added he can understand why industry participants would hope 2023 will be another step towards consumer behavior returning to pre-pandemic levels.
The analyst believes otherwise as the major studios are releasing fewer movies given their focus on streaming, while box office legs are hampered by shorter exclusive theatrical windows.
Mitchelson expects negative long-term secular trends to continue, with streaming content and alternative entertainment options increasing while price increases squeeze out potential customers.
He added it is not clear whether pre-pandemic habits will fully return.
Mitchelson sees industrywide domestic box office revenue up about 4% in 2023. In particular, he sees softness in 1Q23 and 4Q23, while summer 2023 should see offsetting gains.
Mitchelson forecasts 4Q22 domestic box flat, below consensus.
The analyst shifted to well-below-consensus estimates for 4Q22 and 2023 EBITDA.
Also Read: What's Going On With AMC Entertainment Stock Today?
Price Action: CNK shares are trading lower by 5.33% at $9.85 on the last check Wednesday.

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