Analysts Chime in on AMC Amid Uncertainty

B. Riley Securities lowered its price target to $4.50 from $5.50

Assistant Editor
Oct 12, 2020 at 1:08 PM
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The shares of AMC Entertainment Holdings Inc (NYSE:AMC) are modestly lower, down 1.5% at $4.00 at last check after a couple analyst adjustments. William Blair this morning suspended its coverage on AMC due to box office uncertainty amid coronavirus. Meanwhile, B. Riley Securities lowered its price target to $4.50 from $5.50, citing the news that Regal would be re-closing most of its theaters, and projecting concerns over its "increasingly barren" film slate. 

Falling back into the penny stock region in late September, with pressure at the 10-day moving average, the equity is coming off its fifth-straight week of losses. Year-to-date, AMC is down 44%. It's also worth noting, however, that the stock sports a 14-day Relative Strength Index (RSI) of 32, which sits just on the cusp of "oversold" territory, meaning a short-term bounce may be in the cards.

Coming into today, a majority of analysts are hesitant on the theater giant, with eight of the 10 in coverage sporting a "hold" rating, and the remaining two a "strong sell." Meanwhile, the 12-month consensus price target of $3.93 is a 2.7% discount to current levels. 

Short interest has been surging, up 29% in the last two reporting periods. The 21.89 million shares sold short account for a whopping 42% of the stock's available float. In other words, it would take over three days to cover at AMC's average pace of trading.

On the other hand, options traders are looking more bullish than usual, though some of this could be shorts hedging against a potential upside. In the past 10 weeks, 3.57 calls have been bought for every put at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio stands higher than 73% of readings from the past year, meaning calls are being picked up at a relatively faster-than-usual rate. 


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