Citi Maintains Buy Rating On National CineMedia Inc. (NCMI)

Citi Investment Research is maintaining its Buy rating and $22 price target on shares of National CineMedia Inc. NCMI. In a note sent to clients, Citi writes, "National CineMedia faces some tough comps in 2011 due to Avatar in 1Q10 and the strong 3Q10 results driven by strength in the TV scatter market. Mr. Hall believes the 1Q11 comps are likely not a significant issues for the full year as unmet commitments can be met in the following quarters. And, while the 1Q10 box office was up 4.3%, comps are significantly easier over the rest of the year. (The box office was down 1.7% in 2Q, 4.2% in 3Q, and 32.0% in 4Q.) For 3Q, while the comps will be tough, this should be tempered by the addition of 399 screens from Consolidated in 2Q and the 475 National Amusements screen acquired by Rave in 3Q. Overall, we remain bullish on National CineMedia as we think revenue expectations are too low. With the high incremental margin associated with the revenues, we think this could have an outsized impact on EBITDA results. We maintain our Buy rating and $22 target." Shares of NCMI gained 13 cents yesterday to close at $19.42.