With the Hollywood writers and actors strikes having been resolved and studios having delayed some key releases, how will the box office be affected?
Exhibition stocks analyst Eric Wold of B. Riley took a stab at answering the question, adjusting his forecasts in a Tuesday report. He reduced his 2024 industry box office projection “given the number of films that have been moved by studios in recent weeks,” adding that “we feel that we are taking a more conservative approach to our updated 2025 industry box office projection — with an argument that we could have at least maintained, if not increased, our prior projection given the number of high-profile films moved into that year.”
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Wold lowered his fourth-quarter 2023 domestic box office projection due to recent performance trends. “Through this past weekend, domestic box office revenues have totaled $873 million, which represents an approximately 30 percent decline compared to the $1.242 billion for the same quarter-to-date period in the third quarter 2019,” the expert wrote. “While there are a handful of potential $100 million-plus films that could benefit the remainder of the quarter, we are lowering our fourth-quarter domestic industry box office projection from $2.167 billion to $1.878 billion on some disappointing film releases to this point.”
This takes Wold’s 2023 box office projection from $9.216 billion to $8.927 billion.
How about 2024 and 2025 given such slate changes as Warner Bros.’ Dune: Part Two now debuting in early March 2024 and Disney delaying the release of its live-action Snow White movie starring Rachel Zegler from March 2024 to March 2025, among others? Analyst Wold estimated that recent release date shifts could have a total adverse impact on 2024 domestic box office revenues of $847 million but a potential benefit to 2025 box office revenues of $899 million. But overall, he cut his 2024 domestic box office forecast from $9.617 billion to $8.609 billion and his 2025 domestic estimate from $10.299 billion $9.920 billion.
“After the projected box office increase of about 21 percent in 2023 (bringing the industry back to about 79 percent of pre-pandemic levels), this would represent a decline of around 4 percent in 2024 and a subsequent increase of approximately 15 percent in 2025 — taking the 2025 box office back to roughly 87 percent of pre-pandemic levels,” Wold explained but emphasized that the latter could prove to be conservative.
“We were previously projecting that 2025 industry box office revenues would increase around 7 percent … with the flow of new films and continued recovery in the number of films reaching theaters compared to pre-pandemic levels,” the analyst highlighted. “We wanted to account for the possibility that additional films could shift into further years in the weeks ahead. With that in mind, we believe there is a potential set-up for stronger-than-expected results as the film slate firms up in the coming quarters.”
The B. Riley expert previously based his stock price targets on his 2024 earnings estimates, but has now shifted that to 2025 given the post-strike slate changes. This left his price targets unchanged.
Wold remains bullish on the exhibition sector. “With our view that moviegoing demand remains strong in the post-pandemic era and that a hiccup in 2024 is only a reflection of strike-driven production delays, we remain positive on the outlook for the industry,” he noted on Tuesday.
Overall, Wold reiterated his “buy” ratings on the stocks of Cinemark (with a $23 stock price target), Imax Corp. ($27) and Marcus Corp. ($23), while also “highlighting the progress made by AMC (Theatres) toward a more positive view on the shares,” which he currently rates “neutral” with a price target of $15.
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