Shares of AMC Entertainment (NYSE: AMC) surged higher on Friday, rising nearly 10% by the time the market closed.
The stock's gain followed bullish analyst commentary. Credit Suisse analyst Meghan Durkin initiated coverage on AMC shares with an outperform rating.
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Recent pressure on the movie-theater business has given investors "an attractive entry point" into the stock, Durkin said in a note on Friday (via Barron's).
Shares were down more than 40% between mid-April and July 18. Even after Friday's gain, shares are down about 35%. Pressure on the stock has come as the company's own subscription-based loyalty plan has led to lower ticket prices. Making matters worse, analysts have been lowering their earnings forecasts for the company.
Durkin believes the stock's pullback is an overreaction. She initiated coverage on the stock with a 12-month price target of $18, representing 71% upside from the stock's $10.54 price tag at market close on Friday.
In AMC's first-quarter update in May, management was bullish on its expectations for 2019, saying it expected adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to be higher this year than it was last year. But management warned that the timing of popular movie releases during the year means that "it will be a back-end loaded year."
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