Shares of movie theater chains rose Wednesday after a Raymond James analyst started coverage of several stocks with "strong buy" ratings.
In a client note, analyst Joseph D. Hovorka said he thinks the move to distribute films digitally presents an opportunity for long-term growth. Digital distribution will lead to more 3-D movies in theaters, let theaters show alternate types of content and raise the utilization rates of theaters, he said.
Hovorka initiated the ratings for Regal Entertainment Group, Carmike Cinemas and Cinemark Holdings Inc. Regal shares closed Wednesday up 53 cents, or 3.9 percent, at $14.22, while Carmike shares rose 16 cents to $6.34, and Cinemark shares rose 28 cents to $13.07.
The analyst set an $18 price target for Regal, and a $17 price target for Cinemark, saying the companies are "well positioned to take advantage of digital exhibition trends."
For Carmike, Hovorka set a $13 price target. The analyst said the company is a "leader in digital exhibition," since it has converted all of its first-run theaters _ nearly 94 percent of the screens it owns _ to digital.