Cineworld tumbles as Peel Hunt highlights coronavirus impact
Cineworld shares tumbled on Thursday as Peel Hunt downgraded its rating on the stock to ‘hold’ from ‘buy’ and slashed the price target to 140p from 300p, highlighting risks form the coronavirus outbreak.
05 March 2020 11:23:36
Source: Sharecast
The broker pointed to the postponement of the latest James Bond film and people’s concerns about going to the cinema amid the outbreak of Covid-19.
The release of the new Bond, No Time to Die, has been put back seven months to November amid worries about the virus. The world premiere had been due to take place at the Royal Albert Hall in London at the end of March.
"It seems likely there will be further changes in the release schedule which, coupled with consumer concerns about sharing a cinema, will be negative for forecasts," said Peel. "Films are expensive to produce and promote and, with many Asian cinemas closed, and the prospect of, at best, reduced audiences elsewhere, other producers of major films may choose to delay release."
At 1115 GMT, the shares were down 21% at 110.75p.
CMC Markets analyst Michael Hewson said the shares were under pressure due to concerns that the coronavirus will hit footfall, adding that the delay of the Bond film was unlikely to be helping.
"At the end of last year Cineworld issued a profits warning saying that full-year results would come in below expectations which raised concerns that the company might not be able to reduce its debt levels as quickly as previously guided," he said.
"This could be the company’s Achilles heel this year. You can have as many of the bells and whistles of a 4K cinema experience as you like, but if your punters stay in and watch Netflix because of lingering contagion concerns, then you have a problem."