Intact reported fourth-quarter earnings per share that far exceeded expectations, reaching $3.34. The Royal had forecast $2.58 and the market consensus was at $3.03. (Photo: 123RF)
What to do with Cineplex, Intact and Stingray titles? Here are some recommendations from analysts likely to move prices soon. Note: the author may have a totally different opinion from that expressed by the analysts.
Cineplex (CGX-T, $8.93): still a lot of work to do
The film market is slowly recovering from the pandemic years, but for companies that work in this environment, like Cineplex, there is still work to be done to regain the performance of 2019.
Catching up with box office revenue is taking longer than expected, said Scotiabank analyst Maher Yaghi. Revenues from Cineplex’s Rec Room concept, which combines entertainment and dining, saw its revenue increase significantly, but North American box office revenues were impacted by delays in film deliveries.
The delays accumulated during the two years of pandemic are still being felt, adds the analyst. These problems should still persist for the first half of 2023, but might potentially be resolved in the second half of the year.
Fourth-quarter box office revenue was dragged down by weaker-than-expected attendance. Cineplex management still showed strong catch-up in January (88% of the January 2019 total). Scotiabank expects the catch-up to continue through the first half of 2023.
The financial institution also argues that the Rec Room concept will continue its momentum. Already in 2022, its performance had been surpassed that before the pandemic and is expected to reach around 140% in 2023.
Maher Yaghi warns, however, that while revenues from the media sector have rebounded to reach 71% of those pre-pandemic in the fourth quarter, he remains cautious because he sees companies reducing their budgets.
Scotia maintains its forecast of outperformance of the title of Cineplex once morest its sector of activity, but lowers its target price from $11.50 to $11.
