On Wednesday, Roth/MKM maintained a Sell rating for AMC Entertainment (NYSE:AMC), with a steady price target of $4.00. The firm's stance is influenced by several factors including AMC's considerable debt, limited cash flow projections, and a valuation perceived as high. While there is some optimism for the potential box office success in the 2025/2026 timeframe, analysts believe it may take years for the company to adjust to its financial structure and the significant increase in its share count.
AMC concluded the first quarter with $624 million in cash reserves. Roth/MKM's analysis anticipates a cash burn of $335 million in the second quarter but expects a positive free cash flow (FCF) of $155 million in the second half of the year. This projected improvement in cash flow could reduce the necessity for AMC to raise additional equity.
The company's total debt stands at $4.453 billion after it executed a $164 million debt-for-equity swap. As a result of this swap and a recently completed at-the-market (ATM) offering, AMC's interest expenses are now estimated at an annual rate of $346 million.
The debt-for-equity swap, along with the ATM offering, has also affected the company's share count, which is now approximately 325 million. This figure represents a nearly 14-fold increase since the beginning of the pandemic but remains below the authorized maximum of 550 million shares.
In other recent news, AMC Theatres is launching its AMC Summer Movie Camp, offering family-friendly movies at a discounted price. This initiative is part of AMC's ongoing strategy to enhance the movie-going experience.
Meanwhile, AMC has also been in the spotlight of B.Riley analysts after the company announced successful debt reduction transactions. The analysts maintain a Neutral rating on the stock, highlighting that these moves improve AMC's standing with debt holders.
GameStop (NYSE:GME) and AMC Entertainment have also seen a resurgence in their stock prices. This surge is attributed to Keith Gill, a prominent figure in the previous meme stock rally, who recently posted cryptic messages on social media. Both companies saw notable increases in their share prices and trading volumes, sparking investor interest.
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