Cinemark(US:CNK) Benzingaยท2024-06-24 15:30Core Viewpoint - Cinemark Holdings Inc has been upgraded by an analyst due to recent strength in box office releases, debt reduction plans, and the potential for capital returns [2][3][7] Group 1: Box Office Performance - The second quarter box office is expected to decline by 30% year-over-year, but a recovery is anticipated in the third quarter with an estimated decline of only 6% year-over-year [3] - Monthly revenue is projected to turn positive in September and remain strong throughout the fourth quarter, with a forecasted growth of 27% driven by blockbuster titles [4] - The domestic box office is expected to reach $9.4 billion in 2025, representing a 15% increase from 2024 estimates and a 6% increase from 2023 figures [4] Group 2: Debt Management and Capital Returns - Cinemark is likely to pay off debt with cash rather than allowing it to convert to shares, aiming to reduce debt levels to those seen at the end of 2019 [5] - After repaying convertible debt and returning net leverage to pre-pandemic levels, Cinemark is expected to revisit its capital return strategy, with a dividend reinstatement being the most likely option [5] - The company may also consider share buyback authorization as part of its capital return strategy [5] Group 3: Analyst Sentiment and Stock Performance - The analyst upgraded Cinemark's rating from Neutral to Buy and raised the price target from $19 to $26, indicating a positive outlook for the company [7] - Cinemark shares increased by 4% to $20.25, with a 52-week trading range of $13.19 to $20.40, and the stock has risen 22% over the past year [6] - The analyst believes that Cinemark will prosper over the next 2.5 years, citing several favorable trends in the industry [8]