Cineworld shares set for 'hard' bounce, says Peel Hunt

Peel Hunt said on Monday that Cineworld presents "an attractive buying opportunity" for investors with appetite for material risk.

The broker, which rates Cineworld at ‘buy’ with a 180p price target, reiterated its view that cinema demand should bounce back once major films are released.

"This starts this week with Tenet in the UK and internationally, and next week in the US," it said.

Peel Hunt noted that the Cineworld share price has fallen further than any other in its sector coverage, but said it should "bounce hard" once investors are reassured over demand.

The broker cut its forecasts to reflect lockdown lasting longer than it had expected, lowering its FY20E EBITDA estimate from $1.1bn to $318m.

"A key assumption is that revenue will be 50% of pre-Covid-19 levels from September," it said. "However, having estimated cash burn (in the absence of published guidance from the company) we believe that the business will trade at worst on a cash neutral basis from September and end the year with $240m of cash and undrawn facilities."

Peel said that by the time the interims are due on 24 September, both trading and updated information from management should be positive for the share price.

At 1030 BST, the shares were up 3.9% at 53.14p.