Market Report: Cineworld tipped to beat Euro 2016 in a hot summer

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Tipsters at Berenberg have rejected that old theory that cinemas are like ghost towns during the Euros as they urged investors to buy Cineworld shares.

The general perception in the City is that people ditch the movies in favour of a night of football.

While that may be true for the World Cup, Berenberg analyst Benjamin May argued that it is a different story for the European Championships.

His analysis shows that in June and July in World Cup years, cinema admissions in the UK are around 9% lower than normal, while for the months when the Euros are played, admissions are actually 9% higher.

May, who has a Buy rating and 650p target price on Cineworld, discarded suggestions that screens will be empty over the summer, especially with four blockbuster sequels and reboots in the next six weeks: Ghostbusters, Independence Day: Resurgence, Star Trek Beyond, and Finding Nemo follow-up Finding Dory.

“With the movie pipeline strong for summer 2016, we see no reason to expect a material slowdown,” May said. On a day when Brexit fears again kept buyers on the sidelines, Cineworld’s shares slipped just 1.12p to 561.88p.

Safe-haven stocks provided shelter, with gold producer Randgold up 84.86p at 6709.86p. But it was otherwise a day when trading screens flashed red and the FTSE 100 fell 17.86 points to 6097.90.

The bulge-bracket banks weighed into the EU debate, with Barclays arguing that a vote to remain would boost UK stocks by 15%, which would lift the FTSE 100 back near its all-time highs near 7100. On the flipside, it predicted a win for the Leave campaign would trigger a 10% slump.

Elsewhere, JPMorgan Cazenove and Deutsche Bank declared themselves overweight on UK equities, with the latter suggesting they will outperform European stocks in the event of a Brexit.

On AIM, investors in EG Solutions followed the board out of the door as the shares tumbled 2.5p, or 4.6%, to 52p when its chief financial officer, chairman, and two non-exec directors resigned following last week’s profit warning.

That leaves the back-office software provider’s board with just two members, including outspoken chief executive Elizabeth Gooch, who was forced out by the old board before being recalled to the company she founded.

Shares in beleaguered fitness-tracking firm Fitbug dived 0.13p, or 19%, to 0.55p as it revealed plans for an equity fundraiser, alongside a change of strategy to focus on businesses rather than consumers.

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June 13, 2016 |
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