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Shares of National CineMedia Inc. have more than quadrupled in two days, as Wall Street appeared to shrug off the in-theater advertising company’s bankruptcy filing, and focused instead on the upbeat revenue outlook.
“Despite a difficult advertising environment and a still-recovering box office, NCM [National CineMedia] is well-positioned within the ad delivery ecosystem as theatrical attendance is beginning to meaningfully rebound,” Wedbush analyst Alicia Reese wrote in a note to clients. “We think NCM is fundamentally set up to rebound to pre-pandemic levels over time, with its premium and platinum inventory,” Reese added.
Reese reiterated the outperform rating she’s had on the stock since November 2021. Although the stock price target remained at $3.50, which is about six-times the current share price, Reese said she would update her valuation models after working through the details of the bankruptcy filing.
Don’t miss: In-theater advertiser National CineMedia files for Chapter 11 bankruptcy.
The stock
NCMI,
skyrocketed 143.0% toward a five-month high on record volume of 320.8 million shares in afternoon trading, and has run up 284.6% in two days. On Tuesday, the stock had soared 55.0% on volume of 133.3 million shares, which was a record at that time, after AMC Entertainment Holdings Inc.
AMC,
disclosed that it had bought a large stake in the company.
Within NCM’s bankruptcy announcement, that company provided a preview of fourth-quarter results: “[N]CM Inc. experienced increasing demand as more brands returned to cinema advertising to target young, diverse, and highly engaged moviegoing audiences as part of their overall media buys.”
The company said it expects to report fourth-quarter revenue of $91.7 million, up 44.4% from a year ago. That was well above the average estimate of two analysts compiled by FactSet was $61.3 million.
NCM also expects to report operating income growth of 251.3%, while the average FactSet estimate was for a 66% drop, to $2.7 million from $8.0 million.
“Our fourth quarter marked a strong finish to the year as a diverse film release schedule including ‘Black Panther: Wakanda Forever’ and ‘Avatar: The Way of Water’ brought massive audiences back to theaters,” said NCM Chief Executive Officer Tom Lesinski. “We are well positioned to deliver on this momentum as theater traffic builds back towards normal historical patterns and our inventory utilization increases.”
NCM’s pre-movie show Noovie is presented exclusively in 53 theater circuits in the U.S., including those from AMC and Cinemark Holdings Inc.
CNK,
which is NCM’s largest shareholder, as well as Regal Entertainment Group, which is a subsidiary of U.K.-based Cineworld Group PLC.
CNWGQ,
CINE,
which expects to emerge from bankruptcy in the first half of the year.
NCM’s stock, which hasn’t closed above the $1 mark since Sept. 15, 2022, has climbed 127.7% year to date, but has tumbled 78.6% over the past 12 months. In comparison, AMC shares have shed 47.2% the past year and Cinemark’s stock has slipped 0.2%, while the S&P 500 index
SPX,
has declined 6.6%.
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