Benchmark maintains Buy on Cinemark stock with $35 target

On Thursday, Benchmark analysts reiterated their Buy rating on Cinemark Holdings (NYSE:CNK) with a maintained price target of $35.00. Currently trading at $23.36, the stock shows potential upside according to InvestingPro analysis, which indicates the stock is currently undervalued. Analyst targets range from $23.00 to $36.00, with several additional insights available through InvestingPro’s comprehensive coverage. The firm’s analysis suggests that Cinemark does not need to fully return to its 2019 attendance levels to achieve pre-pandemic box office performance. This assessment is due to a more than 20% increase in the average ticket price since 2019. According to the firm, Cinemark would only require 79% of its 2019 attendance to match its previous admission revenue figures. The company’s financial health appears solid, with InvestingPro data showing a healthy gross profit margin of 49.48% and positive earnings of $2.54 per share over the last twelve months.

The analysis also highlighted a significant rise in concession sales per patron (CPP), which have increased by 48% since 2019. With a projected CPP of $7.89 for 2024, even at 79% of the attendance levels from 2019, concession sales could still surpass pre-pandemic levels by 20%. This change is particularly important as concession sales now represent a larger proportion of total sales at 79%, up from 65% in 2019.

Concessions are a key factor in the company’s profitability, boasting an 82% gross margin, which is substantially higher than the 42% gross margin on admission sales. Benchmark’s commentary emphasized the importance of this shift towards higher-margin concession sales, as it presents a considerable opportunity for margin expansion over the figures achieved before the pandemic.

The firm’s positive outlook on Cinemark’s financial recovery and margin expansion potential is based on the assumption that the volume and quality of wide-release films will continue to improve, driving attendance recovery. This optimistic view on the company’s revenue and margin prospects supports Benchmark’s decision to maintain their Buy rating and $35.00 price target on Cinemark stock.

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. Cinemark’s annual revenue for 2024 slightly declined by 0.6% to $3,049.5 million, but net income showed improvement, rising to $309.7 million from $188.2 million in the previous year. Benchmark analysts adjusted their outlook on Cinemark, lowering the price target to $35 from $40, but maintained a Buy rating on the stock. The firm highlighted a promising lineup of films and the expansion of premium-format screens as positive factors for the company’s future. In executive news, Cinemark appointed Wanda Gierhart as Chief Marketing and Content Officer, effective February 28, 2025. Her employment agreement includes a base salary of $575,000 and eligibility for an annual cash incentive bonus. Cinemark also reinstated its annual cash dividend at $0.32 per share, signaling confidence in its recovery post-pandemic and commitment to shareholder value.

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