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Share price down since May as several big name films fail to draw in the crowds
Thursday 06 Jul 2017 Author: Daniel Coatsworth

Cineworld (CINE) 700p

Gain to date: 10.8%

Original entry point: Buy at 632p, 16 March 2017

Don’t be put off by poor cinema box office takings over May and June in the UK when Cineworld (CINE) next reports on trading. Our positive view on Cineworld’s shares is based on its strong position in the UK market and considerable growth opportunities overseas. You shouldn’t judge its fortunes simply off two months’ trading.

Admission figures are likely to be poor for May and June, in our opinion. A lot of the big releases such as The Mummy and Baywatch haven’t done particularly well at the box office. A prolonged spell of sunny weather won’t have helped with admissions, either.

Cineworld

Wonder Woman is the only true big hit of the summer so far, although on a broader basis Cineworld will have benefited from strong takings from Beauty and the Beast and Guardians of the Galaxy Vol 2 earlier in the year.

What’s important is that all this information is arguably already in the public domain as box office figures are published weekly – hence why you’ve seen weakness in Cineworld’s share price since May.

Investment bank Investec last month said Cineworld might have the capacity to pay a special dividend next year if it couldn’t find any suitable acquisitions.

It has an 825p price target on the stock, implying 18% potential share price upside over the next 12 months.

We view Cineworld as a high quality business and an essential stock for a diversified portfolio. Keep buying.

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