Benchmark cuts Cinemark price target to $35, maintains buy rating

On Thursday, Benchmark analysts adjusted their outlook on Cinemark Holdings (NYSE:CNK) shares, lowering the price target to $35 from the previous $40, yet reaffirming a Buy rating on the stock. The revision came amid a challenging week for Cinemark, with shares declining over 12% according to InvestingPro data. The revision followed Cinemark’s recent financial performance disclosure, which presented a mixed picture of the company’s fiscal health.

Cinemark reported robust sales for the fourth quarter of 2024, surpassing revenue expectations, with annual revenue reaching $3.05 billion and EBITDA of $559.9 million. However, the company fell short on AEBITDA, attributed to increased expenses in film rentals, labor, and marketing efforts. Despite these challenges, Cinemark’s decision to reinstate dividends signals the management’s belief in the firm’s underlying strength, supported by a GOOD Financial Health Score according to InvestingPro’s comprehensive analysis.

Benchmark highlighted several factors that could bode well for Cinemark’s future, including a promising lineup of films set for release in 2025, the ongoing expansion of premium-format screens, and a commitment to cost management. These initiatives are expected to enhance per-capita spending and operating margins.

The analysts expressed confidence in Cinemark’s prospects, encouraging investment during periods when the stock’s price is down. They underscored the company’s potential to escalate revenue growth, operational efficiency, and free cash flow generation. Cinemark remains one of Benchmark’s top picks for 2025, despite the reduced price target.

In other recent news, Cinemark Holdings reported its fourth-quarter 2024 earnings, revealing an earnings per share (EPS) of $0.33, which fell short of the forecasted $0.36. Despite this, the company exceeded revenue expectations with $814.3 million against a forecast of $780.75 million, marking a 28% year-over-year increase. The company’s annual net income improved significantly, rising to $309.7 million from $188.2 million in FY 2023. Cinemark has also reinstated its annual cash dividend at $0.32 per share, demonstrating confidence in its post-pandemic recovery. The company entertained 51 million moviegoers in the fourth quarter, achieving a record-high quarterly revenue of $814 million. Analyst firms have noted the mixed performance, as the earnings miss contributed to a negative market reaction. Cinemark remains optimistic about its future, with strategic initiatives aimed at enhancing market share and box office performance. Investors are closely monitoring the company’s strategies, especially in light of its reinstated dividend and ongoing competition within the entertainment landscape.

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