AMC Entertainment Holdings Inc (NYSE: AMC) had a strong Q1, as per the results reported earlier this week. Still, Jeff Mills warns the meme stock is not worth owning, at least in the current environment.
AMC is not trading on fundamentals
The theatre chain closed nearly 10% up on Thursday, but the CIO of Bryn Mawr Trust is convinced it doesn’t represent anything meaningful. On CNBC’s “Power Lunch”, he said:
AMC is a stock that trades down 10% one day, up 10% the next day. So, not indicative of companies that are trading on any sort of fundamentals. It’s very hard to be long, it’s very hard to be short. It’s dangerous quite frankly.
The Wall Street also rates AMC stock at “underweight” with an average price target of $5.76 that represents another 50% downside from here.
AMC down over 60% is still not attractive
AMC Entertainment is down more than 60% from its year-to-date high at present. Still, Mills doesn’t find it attractive even from the valuation standpoint. Explaining why, he noted:
AMC is still trading at 10 times its pre-COVID price to sales ratio. What has changed? The answer is nothing. It’s still unprofitable and not for this market. I wouldn’t touch a name like that with a ten-foot pole, especially from a fundamental perspective.
A day earlier, MoffettNathanson media analysts also cited added competition from streaming as they warned the domestic box office will show no growth in 2023, which could be another negative for AMC.
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