After a secondary stock offering netted AMC Entertainment Holdings (AMC -0.88%) some $428 million, one analyst thinks the theater operator's finances are increasingly solidifying and that could send its stock "sharply higher."
A confluence of events caused B. Riley analyst Eric Wold to raise his price target on AMC to $16 from $13 and reiterate his buy rating on the stock.
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The theater owner said yesterday it issued 43 million new class A shares at an average price of $9.94 per share, which would be sufficient to see it through the rest of the year. Back in January, AMC had been scrambling to cobble together $1 billion from lenders to stay afloat when it seemed likely it would declare bankruptcy, but it has been able to take advantage of a soaring stock price due to a massive short squeeze.
While it no longer appears on the brink and its finances look much improved, AMC is also benefiting from the U.S. Centers for Disease Control and Prevention saying people vaccinated against COVID-19 mostly don't have to wear masks anymore or socially distance in public.
Movie studios are also increasing their production of films, which should help make theaters a destination once more.
In a note to investors, Wold said the combination of better finances, additional agreements with studios on introducing films into theaters, and a global box office recovery bode well for AMC.
His price target suggests there is still 25% upside from where the stock closed yesterday, but more good news might just elevate it even further.
