After another solid weekend at the box office, several Wall Street analysts have issued upbeat outlooks on the exhibition sector, calling for a robust moviegoing rebound from Covid-19 in 2022.
One of the analysts, Eric Handler at MKM Partners, released findings from a survey his firm did of 1,000 moviegoers across the U.S. People who said they went to at least one movie a year before Covid-19, were polled between March 31 to April 4. Asked if they plan to return to a movie theater in the near future, 57% of respondents said yes and only 14% said no, with 29% not sure.
The timing of when exactly they will go back depends on variables like the vaccine rollout. About 46% indicated a return in the next three months, but over six months the number rose to 72%. That pattern, Handler wrote, “sets the industry up well as it looks ahead to 2022.”
While most top circuits have almost every one of their theaters open again, many states continue to impose strict capacity limits and safety protocols. “The theatrical moviegoing experience is in the early stages of a recovery,” Handler wrote, “one which will take a good amount of this year to fully play out.”
Michael Pachter of Wedbush Securities agreed with the sentiment around the latter months of 2021. In a note to clients, he predicted box office in the fourth quarter would total just shy of $2 billion, adding that the number could be even higher. “We view our current [fourth-quarter] estimate as conservative, assuming there will be massive pent-up demand for seeing movies with friends or dates out of the home once the public has been largely inoculated,” Pachter wrote. For comparison, the fourth quarter of 2019 came in at $2.9 billion.
While Pachter sees total 2022 grosses coming up 10% short of 2019 levels, Eric Wold at B. Riley is more optimistic, pegging the drop at 8%. Wold also expects box office to rise 6% in 2023 compared with 2019 as the industry fully regains its footing after the pandemic.
In his report, Wold called the overall theatrical film slate from this year through 2023 “nothing short of amazing” given how many top titles have been delayed. He also highlight’s California’s plan to allow theaters to reopen at 100% capacity on June 15, just ahead of the release of Universal’s F9 on June 25 and Disney’s Black Widow on July 9. About 10% of AMC’s screens and 18% of Cinemark’s are located in the state.
A flurry of release-calendar changes — such as Paramount’s multiple shuffles last Friday — are a sign of recovery and not panic, Wold added. “We increasingly view these shifts as a net positive for the industry,” he wrote. “These moves to slots later in 2021 or in early 2022 merely represent a mindset amongst studios to have these films available to moviegoers when capacity restrictions are loosened and they can be presented to more consumers—something that ultimately benefits the exhibitors just as much.”
Exhibition stocks started the week in the red along with the broader market. Still, Wold notes that the sector’s shares have risen an average of 160% since Pfizer announced results of its clinical vaccine trial in November. In terms of their financials, he said, the cash crunch of 2020 has eased and the performance of Godzilla vs. Kong and other titles shows that revenue is in the process of returning.
“With the focus of the industry recovery shifted to [the second half of 2021] and 2022, we believe as long as companies have enough liquidity to make it to the fall/winter slate, then balance sheets become a relative non-event vs. moved stocks in the heart of the pandemic last year,” Wold wrote. “At this point, we are comfortable that each of the companies in our coverage universe has the appropriate liquidity—especially with the positive moves made by AMC to drive $900 million-plus in additional financing secured since mid-December and the upcoming opportunity to further de-lever the balance sheet.”