Benchmark maintains Buy on Marcus stock with $25 target

On Friday, Benchmark analysts reiterated their Buy rating and $25.00 price target for Marcus Corp . (NYSE:MCS) shares, representing a 56% upside from the current price of $16.06. According to InvestingPro data, analysts maintain a strong Buy consensus with price targets ranging from $25 to $27. The firm's analysts highlighted challenges faced by Marcus's theatrical segment in the first quarter, noting that admissions were flat to down and margins were pressured by high film rental costs and labor inefficiencies. These difficulties were partly attributed to the unexpected performance of the film "Snow White."

Despite these setbacks, Benchmark remains positive about Marcus Corp.'s prospects for the rest of 2025. The analysts have maintained their full-year estimates, buoyed by an impressive second-quarter film slate that includes "A Minecraft Movie," "Sinners," "Thunderbolts," "Mission Impossible," "How to Train Your Dragon," and "F1." They underscore the company's resilience in the face of macroeconomic pressures, such as tariffs or a potential recession, citing cinema's defensive nature and Marcus's historical performance during economic downturns. InvestingPro analysis shows the company maintains a "GOOD" overall financial health score, with particularly strong momentum metrics, suggesting solid fundamentals despite recent challenges.

The analysts also pointed out that Marcus Corp.'s stock is trading at a forward 5.5x enterprise value to adjusted EBITDA, which is nearly half its typical multiple. Current EV/EBITDA stands at 9.1x, with the company generating $24.7 million in levered free cash flow. They emphasized the company's strong cash flow, consistent dividend payments (currently yielding 1.75%), share repurchase plan, and the significant catalyst provided by the upcoming film releases. Additionally, they noted Marcus's proven defensive profile in times of economic uncertainty, though InvestingPro data indicates short-term obligations exceed liquid assets with a current ratio of 0.52.

Benchmark's stance is that much of the first-quarter weakness is already reflected in Marcus Corp.'s stock price, which has declined 25.4% year-to-date despite showing a 19.7% gain over the past year. However, they suggest that if the market has not fully priced in these challenges, any further weakness could present a buying opportunity, provided it is not indicative of a long-term issue. The analysts conclude that any such dips in stock price should be seen as a chance to invest, especially if the underlying issues seem to be short-lived. This aligns with InvestingPro's analysis, which indicates the company is currently trading near its Fair Value, with analysts expecting a return to profitability this year.

In other recent news, Marcus Corporation reported fourth-quarter earnings that did not meet analyst expectations, with earnings per share at $0.03 compared to the consensus estimate of $0.06. Despite this shortfall, the company achieved revenue of $188.3 million, surpassing projections of $176.17 million and marking a 16.6% increase from the previous year. Marcus Theatres experienced a notable revenue increase of 22.9%, reaching $121.2 million, with attendance rising by 29.1%. However, average ticket prices fell by 10.6% due to promotional pricing strategies. The hotel division, Marcus Hotels & Resorts, also saw a revenue increase of 5.4% to $57.6 million, with RevPAR growing by 3.6% at comparable company-owned hotels. For the full fiscal year 2024, Marcus Corporation reported a net loss of $7.8 million, a reversal from net earnings of $14.8 million in the previous fiscal year. The company attributed this loss partly to expenses from debt conversion related to convertible senior notes repurchases. Management expressed confidence in the upcoming film slate for 2025, citing anticipated releases like "Mission Impossible: The Final Reckoning" and "Avatar: Fire and Ash."

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