A meager recovery for the U.S. movie theater industry should take some of the momentum away from AMC Entertainment 's comeback story, according to investment firm Macquarie. Analyst Chad Beynon downgraded the volatile theater stock to underperform from neutral, saying Wednesday in a note to clients that the slow recovery for movie attendance should hold shares back. "There are a multitude of reasons why domestic box office (DBO) performance hasn't recovered (product, shrinking windows, Covid restrictions, etc), but the bottom line is that recent weekly revs are still down 30%+ vs '19 comparable period, while most out of home entertainment options have recovered much faster," the note said. Beynon said he was particularly concerned about the viability of mid-tier movies that previously made between $50 million and $100 million at the box office. The weak recovery could be particularly bad news for AMC, which has high fixed costs, according to Macquarie. "AMC remains a riskier investment, given rent obligations, higher leverage and a difficult margin trajectory following a more normalized recovery," the note said. To be sure, AMC has been one of the main "meme stocks" this year, seeing wild swings in its share price that appear unrelated to the company's fundamentals. Management has used the rise in share price to raise additional cash. The stock is up more than 2,000% this year. Macquarie kept its price target for AMC at $6 per share, which is 87% below where the stock closed on Tuesday. —CNBC's Michael Bloom contributed to this report.
Pedestrians pass in front of an AMC theater in New York.
Scott Mlyn | CNBC
A meager recovery for the U.S. movie theater industry should take some of the momentum away from AMC Entertainment's comeback story, according to investment firm Macquarie.