In a recent report, Barrington Research analysts reviewed the cinema industry and gave their take on 2014 and their outlook for 2015. Overall, Barrington is bullish on the space and named its top picks for investors.

2014 Review

As expected, 4Q14 was a down quarter for domestic box office numbers. The 4.4 percent year-over-year (y/y) decline in Q4 followed y/y declines of 13.0 percent in Q3 and 6.5 percent in Q2. For the year, domestic box office numbers fell 5.2 percent to $10.355 billion.

Attendance reached a 20-year low in 2014, but higher ticket prices and premium showings such as IMAX and 3D screenings picked up most of the slack.

Analysts point to two specific reasons why the 2014 box office numbers fell off from previous years. First, the death of actor Paul Walker led to a rearrangement of the 2014 release schedule that ultimately resulted in no major blockbuster release over the Fourth of July weekend. Secondly, there was no major animated blockbuster during the peak summer months.

2015 Outlook

Excitement surrounding the potential of 2015 box office numbers may be unprecedented. Analysts believe the easy comparisons to the relatively weak 2014 numbers and the schedule of seemingly “can’t miss” movies is a recipe for outperformance by many cinema names.

Barrington analysts believe 2015 has the potential to be a record-breaking year. “Our attempt at a bottoms-up look at 2015 box office prospects suggests that a new full-year record topping $11 billion is well within reason,” they explained in the report.

Top Picks

Barrington has an Outperform rating on the following seven stocks in the space:

• AMC Entertainment Holdings Inc AMC 0.03%
• Carmike Cinemas, Inc. CKEC 0.07%
• Cinemark Holdings, Inc. CNK 0.47%
• IMAX Corporation (USA) IMAX 1.5%
• Marcus Corp MCS 1.96%
• National CineMedia, Inc. NCMI 1.06%
• Regal Entertainment Group RGC 0.37%

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