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Investing.com - Wedbush upgraded AMC Entertainment (NYSE:AMC) from Neutral to Outperform on Friday, raising its price target to $4.00 from $3.00. According to InvestingPro analysis, AMC is currently trading below its Fair Value, with the stock showing significant volatility in recent months.
The upgrade reflects AMC’s potential to benefit from a more consistent movie release schedule in upcoming quarters and its position to gain market share in 2025 and 2026 with premium screens across North America and expansion plans in the UK and EU.
Wedbush noted that AMC has successfully addressed its near-term debt concerns by repaying or postponing all debt due in 2026 and is completing what the firm expects to be the last major share issuance for the foreseeable future. InvestingPro data shows the company carries a substantial $8.3 billion in total debt, with a concerning current ratio of 0.42, indicating potential liquidity challenges.
The theater chain plans to close underperforming locations in 2025 while investing in its most productive theaters, with revenue per screen already trending 3% higher than 2019 levels before additional investments. The company generated $4.55 billion in revenue over the last twelve months, though operating with relatively weak gross profit margins of ~13%. Get deeper insights into AMC’s operational metrics with InvestingPro, which offers 12 additional key tips about the company’s performance.
With box office revenue expected to stabilize, Wedbush projects AMC’s EBITDA will cover interest expenses, eliminating the need for additional share issuances, and forecasts mid-to-high single-digit growth rates in box office revenue over the next few years, followed by low-to-mid single-digit growth thereafter. The company’s current EV/EBITDA multiple of 34x suggests investors are pricing in significant growth expectations.
In other recent news, AMC Entertainment Holdings, Inc. has announced a conditional redemption of its 2026 notes, contingent upon the successful completion of a private offering of Senior Secured Notes due 2029, expected to raise at least $223 million. The company has also reached a debt restructuring agreement with creditors, securing approximately $223 million in new financing to refinance debt maturing in 2026 and converting at least $143 million of existing debt into equity. This restructuring involves exchanging $590 million of existing notes for $825.1 million in new Senior Secured Notes due 2029. AMC has resolved litigation with holders of its 7.5% Senior Secured Notes as part of the agreement. Additionally, AMC has decided to increase the number of advertisements shown in its theaters before movies, partnering with National CineMedia Inc. to introduce a "platinum spot" starting July 1. This move aims to generate additional revenue for the financially challenged theater chain. These developments reflect AMC’s efforts to strengthen its financial position and adapt to ongoing challenges in the industry.
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