Cinema stock could have a head start on the competition

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Credit Suisse has improved Cinemark to “outperform”

Actions of Cinemark Holdings, Inc. (NYSE: CNK) are up 2.4% to $ 22.16 this morning, following a bullish credit rating from Credit Suisse. The analyst upgraded CNK to “outperform” from “neutral” and raised its price target to $ 25 from $ 16, calling it “the best-positioned US pure-play theater operator as the box picks up -office accelerates until 2022 “. Credit Suisse also congratulated Cinemark competitive prices and “superior experience”. This upgrade comes just a day after JP Morgan Securities and Wells Fargo raised their price targets, both to $ 24.

The stock has risen since its August pullback to the $ 14 level. The 40-day moving average has provided solid support since the Cinemark share’s bullish spread at the end of August, however, this rally appears to be stagnating just below the $ 22.50 region. Since the start of the year, CNK is up 24%.

There is a lot of room for a bigger shift in analyst sentiment. Prior to today, five of nine coverage analysts viewed CNK as a “take”.

An unwinding of short-term interests could also put some wind in the sails of Cinemark stock. Short interest climbed 7.4% in the last reporting period, and the 24.82 million shares sold short represent 23.4% of the stock’s available free float. Additionally, it would take more than six days to hedge these bearish bets at the average daily stock trading pace.

Options traders have been much more bullish. On the International Securities Exchange (ISE), Cboe Options Exchange (CBOE) and NASDAQ OMX PHLX (PHLX), CNK posts a 10-day call / put volume ratio of 27.72, which is over 95% readings from the last 12 months. This implies that long calls are being picked up at a much faster rate than usual.


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