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Summer film flops weighing on Cineworld
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.
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.
Important information:
These articles are provided by Shares magazine which is published by AJ Bell Media, a part of AJ Bell. Shares is not written by AJ Bell.
Shares is provided for your general information and use and is not a personal recommendation to invest. It is not intended to be relied upon by you in making or not making any investment decisions. The investments referred to in these articles will not be suitable for all investors. If in doubt please seek appropriate independent financial advice.
Investors acting on the information in these articles do so at their own risk and AJ Bell Media and its staff do not accept liability for losses suffered by investors as a result of their investment decisions.
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