AMC Entertainment Holdings, Inc.
AMC Details
AMC Entertainment Holdings, Inc. (NYSE: AMC) is involved in the theatrical exhibition business. It has theatres in 12 countries, including the United States, Europe, and the Kingdom of Saudi Arabia. Box office admissions, theatre food and beverage sales are the primary sources of revenue for its theatrical exhibitions. AMC owned, operated, or had stakes in 951 theatres and 10,604 screens as of September 30, 2021.
Latest News:
- Most significant Ticket Sales: AMC stated that due to the overwhelming demand for SPIDER-MAN: NO WAY HOME tickets, which went on sale on Monday, November 29, 2021. AMC had its second-busiest ticket sales day in its history for a single movie title. It was also the busiest single day for ticket sales since AMC theatres began reopening in the summer of 2020, following their initial coronavirus closures in March 2020.
- Lawsuit Filed: On November 22, 2021, Miller Shah LLP announced that the US District Court for the Southern District of New York had approved the class action settlement to benefit AMC stockholders, who purchased it between December 20, 2016-August 01, 2017. The purpose of the hearing is to determine whether the proposed settlement of the class action claims asserted in the Action, under which AMC will cause USD 18 million to be deposited into a Settlement Fund in exchange for the dismissal of the Action with prejudice and a release of claims against the Defendants, should be approved by the court as fair and in the best interests of the Class.
9MFY21 Results:
- Surge in Topline: The company reported a 25.59% growth in total revenue to USD 1.36 billion during 9MFY21 (ended September 30, 2021) from USD 1.08 billion during 9MFY20, driven by growth across all segments.
- Fall in Losses: AMC witnessed a decline in net losses to USD 1.14 billion during 9MFY21 vs. USD 3.64 billion during 9MFY20.
- Leveraged Balance Sheet: As of September 30, 2021, the company had cash & cash equivalents of USD 1.61 billion and total debt (including finance leases) of USD 5.53 billion.
Key Risks:
- Supplier Concentration Risk: AMC relies on a few vendors for various products, supplies, and services, including a single vendor for warehousing and distribution of most of the products and supplies for its food and beverage operations. Any shortages, delays, or disruptions in the supply of food and beverage goods and other supplies to its theatres could harm the company's operations and cash flows.
- Dependence on Distributors: AWC relies on motion picture distributors by entering into long-term agreements and competing for licenses on a film-by-film and theatre-by-theatre basis. If its access to motion films is limited or delayed due to deterioration in its relationships with one or more distributors, its business may suffer.
Valuation Methodology: EV/Sales Multiple Based Relative Valuation
(Analysis by Kalkine Group)
* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.
AMC Daily Technical Chart (Source: REFINITIV)
Stock Recommendation:
AMC's share price has fallen 59.95% in the past six months and is currently leaning towards the lower-band of the 52-week range of USD 1.910 to USD 72.62. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 31.22. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 29.03. The stock is trading at a decent technical level, indicating a short term upside in prices.
Considering the correction in the stock price in the past six months, market dominance in theatrical exhibition space, ongoing lawsuits, strong institutional shareholders, current valuation, and associated risks, we recommend a "Speculative Buy" rating on the stock at the current price of USD 24.28, down 1.54% as of December 16, 2021, at 12:08 PM ET.
* The reference data in this report has been partly sourced from REFINITIV.
* All forecasted figures and industry information have been taken from REFINITIV.
* Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.
Immersion Corporation
IMMR Details
Immersion Corporation (NASDAQ: IMMR) is a leading haptics and touch feedback technology developer. By providing mobile, automotive, gaming, and consumer electronics solutions, the company invents, accelerates, and scales haptic experiences. Mobile phones, wearables, consumer electronics, and gaming devices are the software's target applications. IMMR makes money in Asia, North America, and Europe through royalties, license payments, development contracts, and service fees.
9MFY21 Results:
- Growth in Topline: Due to an increase in revenues across all categories, IMMR reported a 29.82% increase in overall revenues to USD 25.34 million during 9MFY21 (ended September 30, 2021) from USD 19.52 million during 9MFY20.
- Rise in Bottomline: Its net income increased to USD 11.15 million during 9MFY21, up from a loss of USD 2.69 million during 9MFY20.
- Strong Balance Sheet: The company's cash and cash equivalents were USD 118.63 million as of September 30, 2021, with no outstanding debt.
Key Risks:
- Customer Concentration Risk: A limited number of customers account for a large amount of the company's revenue, which is projected to continue in the future. In Q3FY21, for example, Samsung accounted for a significant share of the company's total revenues. As a result, if the company loses or reduces revenue from key customers, its operational performance may suffer.
- Shortage of Electronic Components: Assume that the supply of a particular electrical component is disrupted for an extended period (as it was during the COVID-19 pandemic). The number of royalties paid to the company may be reduced, resulting in a decline in its financial situation.
Valuation Methodology: EV/Sales Multiple Based Relative Valuation
(Analysis by Kalkine Group)
* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.
IMMR Daily Technical Chart (Source: REFINITIV)
Stock Recommendation:
IMMR's share price has fallen 44.81% in the past nine months and is currently leaning towards the lower-band of the 52-week range of USD 5.11 to USD 16.64. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 41.41. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 7.00.
Considering the significant correction in the stock price in the past nine months, healthy balance sheet, improvement in financials, current valuation, and associated risks, we recommend a "Speculative Buy" rating on the stock at the current price of USD 5.58, down 4.78% as of December 16, 2021, 12:31 PM ET.
* The reference data in this report has been partly sourced from REFINITIV.
* All forecasted figures and industry information have been taken from REFINITIV.
*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.
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