AMC Entertainment Holdings, Inc. (NYSE:AMC) Just Reported Earnings, And Analysts Cut Their Target Price

The full-year results for AMC Entertainment Holdings, Inc. (NYSE:AMC) were released last week, making it a good time to revisit its performance. It was a respectable set of results; while revenues of US$3.9b were in line with analyst predictions, statutory losses were 18% smaller than expected, with AMC Entertainment Holdings losing US$0.93 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for AMC Entertainment Holdings

After the latest results, the seven analysts covering AMC Entertainment Holdings are now predicting revenues of US$4.40b in 2023. If met, this would reflect a notable 12% improvement in sales compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 79% to US$0.40. Before this earnings announcement, the analysts had been modelling revenues of US$4.52b and losses of US$0.42 per share in 2023. It looks like there's been a modest increase in sentiment in the recent updates, with the analysts becoming a bit more optimistic in their predictions for losses per share, even though the revenue numbers fell somewhat.

The consensus price target fell 20% to US$2.39, with the dip in revenue estimates clearly souring sentiment, despite the forecast reduction in losses. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values AMC Entertainment Holdings at US$4.50 per share, while the most bearish prices it at US$0.50. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. One thing stands out from these estimates, which is that AMC Entertainment Holdings is forecast to grow faster in the future than it has in the past, with revenues expected to display 12% annualised growth until the end of 2023. If achieved, this would be a much better result than the 17% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 8.6% annually. So it looks like AMC Entertainment Holdings is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. Still, earnings per share are more important to value creation for shareholders. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for AMC Entertainment Holdings going out to 2025, and you can see them free on our platform here..

You still need to take note of risks, for example - AMC Entertainment Holdings has 4 warning signs (and 2 which don't sit too well with us) we think you should know about.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.