Shares of AMC (NYSE:AMC) stock are in the spotlight after Roth MKM analyst Eric Handler maintained his “sell” rating and price target of just 50 cents. Handler’s price target reflects a downside of over 85% from the current price.
According to TipRanks, Handler has rated AMC 44 times with a success rate of 67% and an average return of 9.29%. In addition, Handler has an overall success rate of 60% and an average return of 10.30%. Among all 8,495 Wall Street analysts tracked by TipRanks, Handler ranks number 621. Among all 34,085 experts tracked by the site, Handler ranks at 1,658.
Handler’s maintained price target of 50 cents is likely due to the potential conversion of AMC Preferred Equity Units (NYSE:APE) into AMC. Let’s get into the details.
Roth MKM Maintains AMC Stock Price Target of 50 Cents
The two-day hearing to discuss the conversion wrapped up at the end of last month. Before that, Special Master Corinne Elise Amato had issued a recommendation in favor of the conversion. However, it’s ultimately up to Vice Chancellor Morgan Zurn to decide the fate of the conversion. Unfortunately for shareholders, Zurn stated that she would not provide advance notice on when her decision would be released. Still, it’s likely that the decision will be unveiled sooner than later. Bundled along with Zurn’s decision is also the right for AMC to initiate a 1-for-10 reverse stock split and to increase authorized common stock.
Citi analyst Jason Bazinet echoes a similar tone to Handler. Bazinet has a “sell” rating and a price target of $1.65, which was recently reiterated. The analyst believes that the conversion is likely to occur and that the prices of AMC and APE should converge.
“We expect the court to rule in favor of the company consequently clearing a path for the firm to convert its APE Units into AMC common units and issue incremental common units. As a result, we would expect the value of AMC common units and APE Units to converge.”
Bazinet likely believes that AMC will drop lower while APE will rise, as evident by his AMC price target. AMC currently trades over $2 above APE.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
