To be sure, his rating remained neutral. His concern about the company’s debt burden tempered his enthusiasm over the boost AMC will receive when the COVID pandemic ends.
“AMC may take years before it is able to revisit its prior growth strategy as it repays its growing mountain of debt," Pachter wrote in a commentary.
AMC recently traded at $8.38, up 4.1%. It has doubled over the past three months, particularly as the Reddit investing crowd has gone all in on the stock.
Pachter doubled his price target to $5. It’s "tough to get positive here, despite rising industry optimism," the analyst said.
The Leawood, Kan., company, operating the country's largest theater chain, is doing the right thing in terms of reopening policies, the analyst said.
Its steps include installing high-quality air-filtration systems, enhancing cleaning protocols and reducing seating to enable social distancing, Pachter said.
All that has lifted attendance in recent months, even though many of AMC’s theaters remain closed.
He also noted that AMC has raised enough cash by issuing stock and debt to enable the company to operate through mid-summer without substantial ticket sales.
AMC took advantage of the recent burst in its shares to sell more stock in January. Also that month, the company announced a debt issue that pushed bankruptcy “completely off the table,” Chief Executive Adam Aron had said.
AMC plans to report fourth-quarter results after the market closes on Wednesday.
A survey of analysts by FactSet is calling for a GAAP net loss of $3.03 a share, or an adjusted $3.36 a share, on revenue of $142.3 million.