Cineworld threat from Netflix etc is 'red herring', says Berenberg

14th Feb 2019 14:41

(Sharecast News) - Analysts at Berenberg reiterated their 'buy' rating on cinema operator Cineworld on Thursday, noting that it expects the North American market to set "another box office record" in 2019.Berenberg seems to think fears related to video-on-demand services, such as Netflix and Amazon Prime, were "red herrings" and said "out-of-home" leisure activities appeared unlikely to be impacted by the growth of these services."Online VOD channels such as Netflix, Amazon Prime Video and Hulu have grown significantly in terms of subscriber numbers in recent years - leading some to question whether their content could cannibalise the popularity of the cinema," said Berenberg."We consider that unlikely. To begin with, we believe the question customers usually ask themselves is 'shall we go to the cinema, or shall we go bowling, or go to a restaurant?' - and so on."In other words, what they are looking for is an out-of-home leisure activity; in our view, the question is rarely 'shall we go to the cinema or watch a movie at home?'."The German bank, which also reiterated its 340p target price on the company, said the acquisition of US-based cinema operator Regal Cinemas, and the consequent refurbishment of its properties, was also set to give the firm a significant boost to its market share.Berenberg also noted that 2018 was "a strong year" for the North American market in particular, which set a new domestic box office record - something the analysts saw repeating in the current trading year."Heading into 2019, we review the shape of 2018 comps as well as the 2019 slate, and conclude that the North American market is likely to set another box office record in 2019."