Scotiabank is doubling down on its bullish call for shares of Cineplex as movie-going demand recovers from the depths of the pandemic, calling for a near-60 per cent surge in shares of the company over the coming year.
In a note to clients Wednesday, Scotia analyst Maher Yaghi reiterated his outperform rating on the stock – the equivalent of a buy – and his $14.75 price target, arguing there are better days ahead for the nation’s largest movie-theatre operator. “What continues to keep us bullish on Cineplex is the improving movie release schedule as we head into Q4.
We expect strong box office revenues backed by multiple highly anticipated movies, including ‘Black Adam,’ ‘Black Panther,’ and ‘Avatar,’” Yaghi said. Yaghi’s price target implies a 58 per cent upside to Cineplex’s current trading price over the next 12 months.
“Management indicated that Hollywood studios are expected to increase production rates on new theatrical releases and see renewed excitement surrounding releasing movies in theaters vs. online platforms.”
Cineplex recently reported box office revenue in August came in at 64 per cent of levels seen in 2019 – the last comparable quarter before the pandemic effectively shut down theatre operations – though there was a dearth of blockbuster films to bolster entertainment in the quarter.