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The U.S. box office for Q3 was $1.9 billion, which represents a 40% increase year-over-year, but still 32% lower than pre-Covid levels, according to Goldman Sachs analysts.
Analysts note that the recovery worsened throughout the quarter with September marking the lowest box office since 1996, if 2020 is excluded. The box office for September was just 46% of September in 2019.
“Although the timing of content and production delays likely negatively impacted box office in 3Q22, the magnitude of underperformance creates uncertainty on whether the domestic box office should see any outsized recovery in the near future,” the analysts wrote to clients in a note.
The 2022 recovery could be saved by the strong slate of content for the final quarter, including Avatar 2, Black Panther 2, and Black Adam. However, the analysts see the 2023 film slate as “relatively underwhelming”, which prompted them to forecast the 2023 domestic box office to decline YoY.
“If realized, [this] should support our view that the domestic box office should normalize at levels well below pre-pandemic,” they added.
For 2022, box office estimates are increased to $7.9 billion from $7.7 billion while 2023 estimates are lowered to $7.6 billion from $7.8 billion. For instance, the domestic box office in 2019 was $11.4 billion.
The analysts also decreased 2022/23/24 EBITDA estimates for both Imax (NYSE:IMAX) and Cinemark (NYSE:CNK). They remain Sell-rated on both IMAX and CNK shares while they also cut price targets to reflect lowered estimates to $12 and $11 per share, respectively.
