Carmike shares rise after analyst boosts rating
NEW YORK (AP) — Shares of Carmike Cinemas Inc. rose Monday, after an analyst boosted his rating for the theater chain, saying that investors aren't taking into account the boost it will get down the road from its recent acquisition of 16 theaters.
THE SPARK: Caris & Co. analyst David Miller raised his rating for Carmike to "Above Average" from "Average" and raised his price target by $3 to $16, saying that amid their concerns about the company's third-quarter results, investors are overlooking the benefits of its acquisition.
THE BIG PICTURE: Earlier this month, Carmike said it bought 16 theaters for $19 million in cash from Rave Reviews Cinemas LLC, which is owned by investment firm BV Investment Partners. The theaters, which have 251 screens, are in Alabama, Florida, Indiana, Pennsylvania, Tennessee and Texas. About 40 percent have 3-D-capable screens and seven include large Imax screens.
As of June 30, Carmike owned 233 theaters in 35 states.
THE ANALYSIS: Miller said the acquisition will give Carmike better concessions buying power and economy of scale. But he said investors are choosing to instead focus on the movie industry's 6.8 percent drop in U.S. ticket sales during the third quarter and its potential effect on Carmike's results.
The company also should get a revenue boost from the upcoming release of the next movie in the Twilight series, Miller said.
THE SHARES: Up 70 cents, or 5.6 percent, to $13.26 in afternoon trading. Over the past 52 weeks, the company's shares have traded between $5.85 and $15.80.