(Reuters) - The record-breaking launch of the latest Star Wars movie puts the shares of U.S. theater operators on course for a stellar performance this quarter and beyond, analysts said, as rave reviews pull in die-hard fans and theater-shy audiences alike.
“Star Wars: The Force Awakens” had pulled in about $517 million in worldwide ticket sales through Sunday, according to industry experts, re-establishing the celebrated space saga as a global phenomenon for Walt Disney Co.
“Box office will likely end up around 5 percent higher year-over-year and concessions may grow by 6 percent or more, so it is likely we will see the exhibitors print record earnings in the quarter,” Wedbush Securities analyst Michael Pachter said in an email to Reuters.
Fears that the fast-growth of online streaming services such as Netflix Inc would put a permanent dent into ticket sales at U.S. theaters has undermined the share prices of major theater operators this year.
“There’s never a sure thing with movies,” Barrington Research Associates analyst James Goss told Reuters. “(But) in this case, it was probably as close to a sure thing as there was.”
Shares Regal Entertainment Group, AMC Entertainment Holdings Inc, Cinemark Holdings Inc and Carmike Cinemas Inc have fallen between 5 and 15 percent this year, underperforming the S&P 500.
U.S. and Canadian box office revenue fell 5 percent to $10.4 billion in 2014, according to the Motion Picture Association of America.
About 1.27 billion people went to the movies last year, the lowest since 1995, when 1.21 billion turned out, according to the National Association of Theater Owners.
“We’re expecting that AMC and Regal will perform well over the next three - six- 12 months,” Macquarie Capital analyst Chad Beynon told Reuters.
Theater stocks outperformed the S&P by 7 percent in the month after the release earlier this year of blockbusters such as “Jurassic World” and last year’s ‘The Lego Movie”, he noted.
JBL Advisors analyst Jeffrey Logsdon estimates that AMC’s earnings per share could rise by up 5 cents in the current-quarter, based on a box office of $500 million by Dec. 31. For Regal, the biggest U.S. theater operator by market share, earnings could be boosted by 3-4 cents per share, he said.
The fact that the Star Wars movie is playing well in premium large- format screens, and that it is family-oriented, is also a plus for theater operators as both of those trends typically leads to higher in-theater spending.
“This is the type of movie - if you’re going to only see one movie a year - you’ll splurge and pay the extra $5 to see it in the best format,” Beynon said.
Disney Chief Executive Bob Iger said on Bloomberg TV on Monday that the movie could have raked in $528 million in worldwide ticket sales over the weekend.
“I think this result ... puts to rest any concerns that Netflix and Amazon Prime and HBO Go and other over-the-top disruptors are taking away from the box office. That is not true,” Beynon said. “We think this was good evidence that the industry is still very healthy.”
Still investors - taking Han Solo’s advice, perhaps - aren’t getting cocky just yet.
Disney shares were down 1 percent at $106.60 in morning trading, Regal 1.1 percent at $17.94, AMC 1.8 percent at $24.32 and Cinemark 0.4 percent at $32.30. Carmike was up 0.04 percent $22.48.
Reporting by Devika Krishna Kumar and Anya George Tharakan in Bengaluru; Editing by Ted Kerr