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The analysts also declared that while the fundamentals look good for the second quarter, the structural issues are unchanged, and the firm continues to believe “the company’s shares are trading at an irrational valuation.”
“While the box office has exceeded projections in 1H23, our negative view towards AMC shares is unchanged, reflecting: (1) valuation is at a substantial premium to historical multiples and (2) dilution from equity issuances is offsetting improving box office results,” they said.
“The shares are trading at roughly 21x our 2024E adjusted EBITDA of $430mn, considerably higher than the exhibition industry’s historical trading range of 5.5x-9x current-year adjusted EBITDA.”
Roth MKM calculates that AMC would need to generate $984 million of adjusted EBITDA to justify its current market capitalization, which is 129% higher than the firm’s AMC 2024E forecast and 6% higher than its all-time high of $929M generated in 2018.
