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 ReadWhat'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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