It’s well known that the Covid-19 has wreaked havoc on movie theaters. Between stay at home orders, occupancy limitations, and full lockdown mandates, it’s been tough for movie house chains to catch a break. But analysts are breathing hope into the system with predictions for 2021.
Theater exhibition analyst Eric Wold of B. Riley said in a note to clients that he had a meeting with Cinemark management in which he doubled his 12-month price target for the theater chain from $14 to $28, a major win for the struggling exhibitor, Variety reports. The stocks went from “neutral” to “buy,” causing the company’s shares to spike early in the trading morning on Friday, but have settled down to around $19. That’s about even with where they were in June 2020, when the first wave of the virus had settled down.
“We came away from our discussion increasingly confident in the steps management has taken over the past year to not only keep Cinemark financially on track during the uncertainty but to also position the company to emerge from the other side in a stronger position—both in terms of potential market share gains and margin expansion,” Wold wrote. “With that, we are comfortable looking ahead to our newly introduced 2023 estimates as a return to levels we previously projected for 2020/2021 before the pandemic.”
CEO Mark Zoradi and the Cinemark Management team have reportedly said that the first part of 2021 will be “tough,” with vaccines being slow to rollout and a sparse film slate on the horizon. However, the second quarter will see “modest” improvement, with a “stronger” bounceback in Q3. Wold says there is “evidence showing moviegoing habits will return.”
This is welcome news to Cinemark, given that that company has been facing major financial problems over the past months. The exhibitor began furloughing employees as early as April 2020 when most of its 350 locations around the country closed. Cinemark CEO Mark Zoradi, along with the board of directors, were reported to forego their salaries during the pandemic.
Cinemark recently agrees to a shorter theatrical window for some films, per a proposal from NBCUniversal to allow movies to be released on VOD early, contingent on the film’s box office performance. The new agreement stipulates that movies that earn more than $50 million during opening weekend will have to remain in theaters for at least 31 days including five weekends, while titles that make less than that can head to digital after just 17 days.