Canaccord slashes target price on Cineworld

Analysts at Canaccord Genuity slashed their target price on theatre operator Cineworld from 270.0p to 140.0p on Wednesday but said the group could very well represent a "surprise recovery play".

The Canadian broker said Cineworld could "bounce back strongly" when cinemas potentially reopen towards the end June, partly thanks to Dark Knight director Christopher Nolan's highly anticipated film Tenet and Disney's delayed Mulan remake in July - not to mention an "excellent" film slate through 2021.

"Cinemas can cope with strict physical distancing protocols as they typically run on 20% to 22% occupancy," highlighted the analysts, which also reiterated their 'buy' recommendation for the group's shares.

Cannacord noted that in addition to securing covenant waivers, its scenario analysis suggested that Cineworld may only need to raise as little as $250m in extra liquidity in order to correct the ship.

However, the analysts questioned the fact that Cineworld remained publicly committed to its acquisition of Cineplex - despite the timing of the $3.2bn deal now looking "terrible" and "very mispriced".

"Cineplex's share price suggests the market does not believe that the deal will be completed; we think that the odds of completion are, at best, evens," said the analysts.