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On Friday, Benchmark analyst Mike Hickey maintained a Buy rating on National CineMedia (NASDAQ:NCMI), currently trading at $5.71, with a steady price target of $8.00. According to InvestingPro data, the stock has shown significant volatility with a 9.4% gain over the past week, despite a 16.6% decline over six months. Hickey’s endorsement comes with the addition of National CineMedia to Benchmark’s Best Idea List, anticipating a strong growth trajectory for the company in 2025.
The optimism is based on expected increases in box office revenue, estimated to rise by 10% year-over-year, and an expansion of the core U.S. advertising market by 8%. Hickey points out the limited inventory for streaming advertisements, which is less than 15%, highlighting cinema’s value as a high-engagement advertising medium that reaches a diverse audience, with an average age of 30 and 62% multicultural composition. InvestingPro analysis suggests the company is currently undervalued, with 8 additional exclusive insights available to subscribers.
National CineMedia’s financial position appears to be strengthening, with the analyst noting the company’s significant debt elimination of $1.1 billion. InvestingPro data confirms strong financial health with a current ratio of 2.42 and liquid assets exceeding short-term obligations. The company is also planning to reinstate dividends in 2025 and has announced a $100 million buyback program, which are seen as positive moves for the company’s financial health.
Hickey further comments on the company’s revenue growth strategies, which include expanding programmatic advertising, developing self-serve platforms, and leveraging high-margin digital targeting. These initiatives are expected to drive scalable revenue growth for National CineMedia, supporting the rationale behind its inclusion on the Best Idea List. With earnings scheduled for March 19 and analysts maintaining a strong buy consensus, investors can access comprehensive analysis and additional metrics through the detailed Pro Research Report available on InvestingPro.
In other recent news, National CineMedia reported its fourth-quarter 2024 earnings, revealing a revenue of $86.3 million, which slightly exceeded guidance. Despite a decrease in annual revenue to $240.8 million from $259.8 million in 2023, the company showed improvement in free cash flow, reaching $54.5 million from a negative $48.8 million the previous year. Benchmark analysts maintained their Buy rating with an $8 target, citing the company’s strong performance in the fourth quarter due to effective cost management and robust advertising, particularly in the scatter market. Analysts from Benchmark also noted that National CineMedia’s disciplined approach helped offset challenges such as weaker upfront sales and a difficult advertising mix. Looking forward, the company anticipates a challenging first quarter of 2025 but is optimistic about stronger performance in subsequent quarters, driven by a promising film slate and increased advertiser interest. The company is also scheduled to provide further strategic insights during its Investor Day in March 2025. National CineMedia’s financial position remains healthy, with no long-term debt and a $100 million share repurchase program in place.
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