Shares of AMC Entertainment (AMC -3.83%) popped 13% Monday, following bullish analyst commentary.
B. Riley Securities analyst Eric Wold lifted his rating on the movie theater company's stock from neutral to buy. He sees AMC's share price rising to $13, or roughly 23% higher than its closing price of $10.61.
Wold's upgrade came after the strong opening weekend performance of Godzilla vs. Kong. The movie racked up $48.5 million in domestic box office receipts, despite many theaters operating at significantly reduced capacity due to COVID-19 prevention measures. This compared favorably with the previous Godzilla film, King of the Monsters, which generated $47.8 million during its opening weekend in May 2019.
"These results are very telling, especially considering that the movie was available for free to HBO Max subscribers at the same time as the theatrical release," Wold said.
Godzilla vs. Kong's impressive opening weekend suggests that people still enjoy going to the movies, despite the coronavirus-related risks. That bodes well for AMC, which operates the largest number of theaters in the U.S.
It also comes at a crucial time for the company. AMC needs to bring in enough cash to service its $5.7 billion debt load, a significant portion of which has interest rates above 10%.
AMC is seeking to sell as many as 500 million new shares to reduce its burdensome debt and bolster its cash reserves, following its near descent into bankruptcy during the pandemic.