By Senad Karaahmetovic
Shares of AMC Entertainment (NYSE:AMC) are vastly overvalued, according to Citi analysts.
The analysts reiterated a Sell rating and cut the price target to $1.10 per share to reflect updated estimates. They see an 85% downside risk for the Sell-rated AMC stock based on the updated price target.
“We maintain our Sell rating, as we believe that the shares are overvalued at prevailing levels,” they said in a client note.
The analysts made the latest updates to Citi’s model to reflect Q3 performance and their latest outlook for the AMC stock.
Earlier this month, AMC said its revenue rose 27% to nearly $1 billion, although net loss widened to $226.9M. Both top and bottom line results came in better than expected.
The management also noted that they expect to see a continued recovery in the U.S. box office, which should result in a 15%-25% growth in 2023. Still, the analysts' base-case scenario is more skeptical about the U.S. box office growth.
“Given the proliferation of multiple streaming services over the last several years, we see downside risk to the global box office going forward. In addition, these recent industry developments suggest that the strategic role of exhibitors may be diminishing,” they added in a note.
As of 09:25 ET (14:25 GMT), AMC stock is up about 1% in pre-market Friday.