AMC Entertainment's Growing Debt Raises Concerns Despite Increasing Confidence in Meme Stock Industry - www.malkamdior.com

AMC Entertainment's (AMC) growing debt raises concerns despite increasing confidence in the exhibition industry, Wedbush said Monday.

The firm, however, raised the movie theater chain's price target to $5 from $2.50, while maintaining its neutral rating.

"AMC remains the highest risk in the exhibition space given its exceedingly high debt balance, while the company has meaningfully diluted its shares between (the third quarter of 2020 and the first quarter of 2021)," said the firm's analysts, led by Michael Pachter.

AMC has a net debt of $5.47 billion, according to Wedbush.

The Leawood, Kansas-based company has enough liquidity raised through numerous debt and equity offerings that will help the company to survive until at least the third quarter, Pachter said, but it "may take years before it is able to revisit its prior growth strategy as it repays its growing mountain of debt."

AMC will report its fourth-quarter results on Wednesday. Wedbush lowered its revenue outlook on AMC to $141 million from $252 million, while narrowing its per-share loss estimate to $2.62 from $4.39. Analysts polled by Capital IQ are expecting revenue of $142.4 million, an adjusted loss of $3.12 per share and a GAAP loss of $3.48.

Wedbush's expectations assume an 85% annual decline in domestic admissions revenue per screen versus a 94% annual drop in the industry, and a decrease of 300 basis points in film rent versus a prior increase of 150 basis points.

Price: 9.06, Change: +1.01, Percent Change: +12.61