July 19, 2022
Cinemark, the nation’s No. 3 theatrical chain, is getting some Wall Street love after posting a June box office performance that was the chain’s biggest in revenue since the pandemic began.
Citing the release of Paramount Pictures’ Top Gun: Maverick, featuring Tom Cruise in the sequel to his 1986 original, Universal Pictures’s Jurassic World: Dominion, Pixar’s Lightyear and Warner Bros. Pictures’ Elvis biopic, among others, Morgan Stanley media analyst Benjamin Swinburne upgraded the Cinemark’s stock rating to “overweight.” The move sent the chain’s stock up more than 9% in midmorning trading.
“Beginning in late 2021, the North American box office has been trending steadily upward as consumers have become more comfortable with going to theaters,” Swinburne wrote in a note, adding that the return of the frequent moviegoer, which he believes makes up 50% of box office ticket sales, is driving revenue.
“We have consistently stated that a steady stream of diverse, compelling new film content, along with improving moviegoer sentiment, would be driving forces behind the re-ignition of theatrical exhibition,” Cinemark CEO Sean Gamble said last month.
Swinburne contends the North American box office can pull back about 85% of the pre-pandemic 2019 levels by 2023, with Cinemark maintaining a 14% market share behind Regal Cinema and AMC Theatres.
“Moviegoing has also proven counter-cyclical as a form of inexpensive entertainment, insulating [Cinemark] from a slowing economy,” he wrote.