BMO (TSX:BMO) Capital has maintained its Market Perform rating on Cineplex (CGX: CN) (OTC: CPXGF), with a consistent price target of Cdn$12.50. The firm's assessment followed Cineplex's quarterly financial results, which revealed revenues slightly below expectations and a considerable drop in year-over-year earnings.
Cineplex reported a 25% decline in consolidated revenues, which totaled $277 million, compared to the anticipated $281 million. The company's adjusted EBITDAaL fell sharply to $1 million against last year's $47 million, which was also marginally below the consensus estimate of $2 million.
Earnings per share from continuing operations showed a loss of -$0.33, a significant change from the previous year's $1.80 earnings, albeit slightly better than the consensus forecast of -$0.37.
Despite the underwhelming second-quarter performance, the analyst highlighted the potential for box office improvement in the second half of 2024. This optimism is based on the expected release of major films and the comeback of popular premium franchises. Additionally, the comparison with future quarters is favorable, as the fourth quarter of 2024 and the first quarter of 2025 are expected to present easier comparables.
In a strategic move to enhance shareholder value, Cineplex has launched a Normal Course Issuer Bid (NCIB), which allows the company to repurchase up to 10% of its shares.
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