Shares of AMC Entertainment (AMC +15.53%) are jumping on Friday, up 10.6% to $3.32 as of 2:05 p.m. ET. At that point in the session, the S&P 500 was off by about 0.2% and the Nasdaq Composite was flat.
A ratings upgrade from Wedbush analyst Michael Pachter appeared to be the driving force behind the movie theater chain's stock move.
NYSE: AMC
Key Data Points
Wedbush sees a significant upside
On Friday morning, Wedbush's Pachter upgraded AMC shares from neutral to outperform and raised his 12-month price target on the stock from $3 to $4. The analyst cited an upcoming film release schedule that's more consistent than what we've seen recently. He also pointed to AMC's lead in premium screens in North America as an advantage that could help it capture more market share, as well as the company's expansion plans in the U.K. and the European Union.
Pachter was also impressed with AMC's cost-cutting efforts, which have included closing underperforming theaters., That boosted its bottom line, allowing it to reduce its debt and eliminating its need to issue additional shares in the near future.
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AMC has its work cut out for it
AMC stock has a lot of loyal fans who, despite the company's troubles, see a bright future for it. Their support has turned it into a meme stock. But I'm not convinced by their bullish views. The company's balance sheet is in rough shape with negative equity approaching $2 billion, and it has been years since it has operated in the black. I'm a movie lover, and I wish I could say differently, but consumer trends are not working in AMC's favor. In 2024, roughly 760 million movie tickets were sold in the U.S., down from 1.2 billion the year before the pandemic hit. That in turn was down from the late 1990s through the early 2000s, when 1.4 billion or more tickets were sold during most years.
