Texas Capital sees Cinemark stock rising with $31 target

Tuesday, Texas Capital Securities began coverage on Cinemark Holdings (NYSE:CNK) stock, issuing a Buy rating and setting a price target of $31.00. The firm’s analysts highlighted Cinemark’s strong position as the third-largest theater circuit in the U.S. and North America and its potential to capitalize on the global box office revenue recovery post-pandemic and Hollywood strikes. With a market capitalization of $3 billion and a P/E ratio of 9.9x, InvestingPro data shows the company trading at attractive valuations relative to its growth potential.

Analysts project that Cinemark will outperform its peers during the industry’s recovery phase, citing expectations of increased average ticket prices and improved concession spending patterns. The company is anticipated to return to its pre-pandemic AEBITDA levels by 2026. This optimism appears well-founded, as InvestingPro data reveals the company generated $559.9 million in EBITDA over the last twelve months, with a healthy gross profit margin of 49.5%.

Texas Capital Securities also pointed to Cinemark’s strengthened balance sheet in recent years, which is expected to support an attractive return of capital to shareholders in the foreseeable future. The $31 price target suggests a roughly 24% potential upside from the stock’s current levels, coupled with an approximate 1% dividend yield.

Cinemark’s strategic positioning and financial health appear to set the stage for its continued success in the recovering entertainment industry, as per the analysts’ assessment. The firm’s optimistic outlook reflects confidence in Cinemark’s ability to leverage its market presence and operational capabilities for growth and shareholder returns.

In other recent news, Cinemark Holdings reported its fourth-quarter earnings with revenue surpassing expectations at $814.3 million, compared to the estimated $780.75 million. However, the company’s earnings per share (EPS) fell short of analyst expectations, reporting $0.33 against the anticipated $0.36. Despite this, Cinemark’s annual net income showed improvement, rising to $309.7 million from $188.2 million in the previous year. The company also reinstated its cash dividend, signaling confidence in its recovery post-pandemic.

In another development, Cinemark announced a $200 million stock buyback program, which reflects the company’s confidence in its long-term business prospects. Benchmark analysts maintained their Buy rating on Cinemark stock, though they adjusted the price target from $40 to $35, citing a mixed financial performance. The firm highlighted the potential for revenue growth and operational efficiency as key factors for future success. Additionally, Cinemark appointed Wanda Gierhart as Chief Marketing and Content Officer, reinforcing its commitment to strong executive leadership.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.