Cinemark shares fall after MKM cuts price target but analyst is upbeat on name, expects another dividend hike
Cinemark Holdings Inc. shares were lower in a rising market Wednesday, after MKM Partners cut its stock price target, but said there are many reasons to believe the stock is oversold. Analyst Eric Handler, who rates the stock a buy, lowered his stock price target to $36 from $42, describing the cinema chain as an "out of favor name, but one with several positive investment highlights." These include a clean balance sheet, that makes it likely the company will raise its annual dividend for a fifth straight year. The analyst also likes the company's Latin America presence and declining capex outlook. "With a challenging 2020 box office outlook, the first half is likely to prove difficult for Cinemark's shares," he wrote in a note. "That said, driven by what appears to be a stronger 2021 release slate, it is our view a recovery in 2H20 has merit." In Latin America, Brazil, Cinemark's biggest Latam market, outperformed the regional market in the fourth quarter with revenue up 3.6%. That trend continued in January, when the Brazil box office set a record for the month. Shares have fallen 14% in the last 12 months, while the S&P 500 has gained 23%.
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