Cineworld’s (LON:CINE) strong line-up of films will help offset the hurdle posed by the London 2012 Olympics, according to Investec.
The cinema chain said the Games are set to add to an already challenging outlook for the company as it announced a 1.1 per cent rise in first half revenues.
But the broker reckons filmgoers will be queuing up to see 3D movies over the coming months, such as The Amazing Spider-Man, Ice Age 4 and The Hobbit.
Theatres will also screen the concluding parts of the Batman and Twilight series, Dark Knight Rises and Breaking Dawn (Part 2), which are likely to draw large crowds, it added.
Most City brokers echoed these sentiments, but Panmure Gordon was less optimistic with a ‘hold’ rating on the stock.
“Whilst Cineworld’s valuation remains undemanding, trading on a 2012E price-earnings ratio of 10.4, with an attractive 5.5 per cent dividend yield, we struggle to identify any positive near-term catalysts for the share price,” said analyst Lindsey Kerrigan.
Canaccord Genuity however highlights the possibility of opening as many as 20 new cinemas by 2017 as a reason for the share price to shift north.
Box office takings for the 26 weeks to June 28 were up 4.1 per cent at Cineworld, while retail was down 2.1 per cent and “other income” fell 18.7 per cent.
“While the timing of the Olympics is expected to add to the challenges of a tough third quarter comparative, the film line up has strong 3D product in the second half.
“As a result we remain confident of delivering growth for the year as a whole in line with current market expectations,” Cineworld said.
Shares slipped 2 pence or 1 per cent to 207.5 pence.