Afraid of its high debt, AMC Entertainment (NYSE:AMC) is not getting much positive analyst attention. This could prove to be a missed opportunity for investors.
Last week, AMC stock exceeded a Wedbush "Hold" rating and a $7.00 price target by trading above that price.
AMC has a good chance of re-visiting its 52-week high of $12.13. Bears, who have a 30% short float on the company, are betting that the movie theatre chain will suffer from streaming.
Disney’s (NYSE:DIS) Mulan will cost families $30 to watch on streaming. This does not replace the theatre experience. As movie fans itch for watching blockbuster movies safely in a theatre, AMC’s revenues will jump.
AMC renegotiated its debt and refinanced at favorable rates. It took advantage of the low rates and will cut debt servicing costs. When theatres shut down, it cut staff to the minimum and, with the support of its landlords, stopped paying rent.
Now that theatres are reopening in the U.S., AMC, along with its landlords, stand to rebound.
As moviegoers realize the limited capacity re-opening and deep cleaning and filter at theatres provide safety, attendance will rebound.
Despite AMC stock already doubling, investors should consider investing in this company at these levels.
Disclosure: the author owns shares of AMC.
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