Mania Over Bond Film ‘No Time to Die’ Gives Beaten-Down Stock a Boost
(Bloomberg) -- The release of the latest James Bond film “No Time to Die” in U.K. theaters on Thursday is breathing life into Cineworld Group Plc.
Shares in the London-based cinema chain have rallied in recent days in anticipation of increased box office sales from the movie starring Daniel Craig, and are on course for their biggest monthly gain since February. Still, Cineworld’s market capitalization of 1.1 billion pounds ($1.5 billion) is well below its pre-Covid peak of 4.4 billion pounds in 2018.
“The rush of Bond bookings comes as a new uplifting scene for Cineworld, given the sorry story that played out during the pandemic,” Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said in an email. “Bond alone won’t be the secret weapon back to health, but with a pipeline of blockbusters lined up it does appear that the path ahead is now smoother for the company.”
Since the film’s London premiere on Tuesday, 91% of critics have published favorable ratings, according to review aggregator Rotten Tomatoes.
Cineworld’s stock has more than halved during the pandemic, when movie theaters were forced to close or operate at reduced capacity. The release date for Metro-Goldwyn-Mayer Inc.’s “No Time to Die” had originally been scheduled for April 2020, and its postponement, along with theatrical delays to other blockbuster releases, cast doubt on the film industry’s ability to weather the pandemic.
A jolt of optimism came this month, when Walt Disney Co.’s Marvel film “Shang-Chi and the Legend of the Ten Rings” made a record $94.7 million in U.S. and Canadian theaters over the four-day Labor Day weekend, a sign that moviegoers will return as economies continue to reopen.
Analysts expect Cineworld’s share rally to continue, with the average 12-month price target suggesting a potential gain of 19%, according to data compiled by Bloomberg.
Still, some short sellers are betting that the worst isn’t yet over for the cinema operator, which is facing increased competition from streaming services including Netflix Inc. Short interest stands at about 20% of Cineworld’s freely traded shares, down from a multi-year high of 32% in October, according to data compiled by IHS Markit Ltd.
“There are some worrying structural changes within that industry,” Stephen Payne, a portfolio manager at Janus Henderson Investors, said in an interview. “The share price can move around very aggressively in both directions, depending on if the news flow is a bit better or a bit worse.”
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