The Globe and Mail reports in its Thursday edition that Canaccord analyst Aravinda Galappatthige raised Cineplex to "speculative buy" from "hold," despite lingering "uncertainty" from the both the impact of the COVID-19 pandemic and the status of its $2.8-billion acquisition by Britain-based Cineworld. The Globe's David Leeder writes in the Eye On Equities column that Mr. Galappatthige slashed his share target by $12.50 to $21.50. Analysts on average target the shares at $29.50. Mr. Galappatthige says in a note: "We have revised our estimates for Cineplex as we update our financial model based on our latest expectations around potential opening dates for cinemas, the likely slope of the ramp-up thereafter given film slate and other considerations (e.g. initial cautiousness by patrons, imposition of capacity limitation in initial months, etc.), and more aggressive cost reduction initiatives, particularly through Q1-Q3 2020. Our new forecast assumes a gradual reopening of cinemas by mid-August, but with low takeup early on. ... The transaction requires approval under the Investment Canada Act (Heritage Canada). Recall the period of review was extended from the end of March, with further extensions possible."
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