Ahead of the Bell: Cinemark Holdings upgraded

NEW YORK - Cinemark Holdings Inc.'s recent debt offering clears the way for a rollout of digital projectors and 3-D technology, an analyst said as he upgraded the movie theater chain's stock.

Lazard Capital Markets analyst Barton Crockett said in a note to investors Tuesday he believes the country's No. 3 movie theater chain could get a 10 percent lift to EBITDA, or earnings before interest, taxes, depreciation and amortization, from the upgrade to 3-D screens. Theaters can charge higher ticket prices for movies shown in 3-D.

He upgraded Cinemark to "Buy" from "Hold."

In June, the Plano, Texas company said it would offer $470 million in senior notes due 2019.

Cinemark's debt issuance, along with another from rival theater chain Regal Entertainment Group last week, indicate that "the market for movie theater-related debt is opening up," Crockett said, allowing the theaters to progress with planned upgrades to digital projectors and 3-D. Plans for the rollout had been held up by frozen credit markets since late last year.

Cinemark currently has about 180 3-D screens, Crockett said. He expects the company to eventually have 1,500 3-D screens in the U.S.

Crockett has a $13 price target on the stock, which closed at $10.67 on Monday. That implies Crockett expects the shares to gain 22 percent.

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