Citi sees Cineworld risk/reward case 'skewed towards the upside'

Cineworld has seen pro-forma revenue increase 6.7% in constant currency terms at the beginning of 2018, predominately driven by US cinema chain Regal, which has shown above-market growth, the analysts said.

As a result of this success, Citi forecast 5.3% constant currency growth for the full-year on a pro-forma basis, but dropped its earnings per share estimates by 1%, due to the US dollar's appreciation, which has more than offset its increased Regal estimates.

Nevertheless, Citi added: "We have taken a conservative approach by assuming Regal's growth slows for the remainder of the year, given performance is film dependent."

"We keep our buy rating and view the risk/reward as still being skewed to the upside."

Citi also increased its target price on Cineworld to 300p from 270p, after factoring in the stronger US dollar and assuming a slightly faster debt paydown.