Citi analysts have revised the price target on AMC stock from an initial $3.10 to $3.20 after the cinema operator's shares experienced an impressive 175% surge in just 2 days.

  Citi updated its model for AMC Entertainment (NYSE: AMC) Holdings Inc., in response to the significant surge in shares of the cinema chain operator. AMC stock rose by 52% in premarket trade on Tuesday and added 78.4% on Monday, amounting to an approximate 175% increase compared to Friday's closing price.

In light of this, Citi analysts raised the price target on AMC stock to $3.20 from the previous $3.10 while reaffirming the Sell rating.

 The decision to revise the price target was influenced by AMC's first-quarter 2024 revenue and adjusted EBITDA, aligning with preliminary results released on April 26th.

 Additionally, Citi's new target price reflects a scenario where the company issues equity at the current share price to pay down a portion of its debt, highlighting the projected valuation's reliance on an approximately 7.5x enterprise value to adjusted EBITDA ratio, consistent with AMC's three-year average multiple prior to the pandemic. 

Despite the modest increase in the target price, Citi maintains a bearish stance, citing the overvaluation of AMC's shares at present market levels, influenced by the long-term impact of the COVID-19 pandemic on the movie theater industry. 

This is due to the substantial drop in global box office revenues caused by closures and the challenges posed by the growth of multiple streaming services. AMC is a significant player in the theatrical exhibition sector, operating approximately 940 theaters with around 10,500 screens, predominantly in North America, with operations spanning across 12 countries, highlighting its global footprint in the industry.