03:14 PM EDT, 04/01/2024 (MT Newswires) -- First-quarter domestic box office revenue likely came in better than expected amid strong moviegoing demand, which is "key to driving confidence" in improving trends going forward, B. Riley Securities said Monday.

Domestic box office revenue is expected to have fallen 6% year over year to about $1.65 billion for the March quarter, though that would top B. Riley's $1.60 billion view. The drop in sales was "well anticipated" following slate movements due to the recent Hollywood strikes, B. Riley analyst Eric Wold said in a note.

"Nevertheless, we believe the strong results from a handful of films -- "Dune: Part Two," "Kung Fu Panda 4," and "Bob Marley: One Love" -- demonstrate the resiliency of post-pandemic moviegoing demand across a variety of consumer demographics," Wold wrote.

Imax's ( IMAX ) first-quarter global box office collections likely totaled $261 million, topping both B. Riley's $227 million view and Wall Street's $230 million expectations. The firm attributed the beat to the format's box office share gain of more than 21% for "Dune: Part Two." The company's domestic box office market share is estimated to have increased to 5.8%, which B. Riley said represented a tie for the strongest performance coming out of the coronavirus pandemic.

"While we acknowledge that the impressive box office share from 'Dune: Part Two' during an otherwise weak box office period played a strong role with these share gains, we continue to expect an increasing level of Imax ( IMAX ) camera integration into future film production -- which is more likely to make these recent share gains more of a baseline going forward," Wold said.

The brokerage expects the first three quarters of the year to represent "a drain" on the cash balance of AMC Entertainment ( AMC ) , though the company should be able to positively address its debt maturities beyond 2026, according to the note. "While we remain neutral-rated on AMC shares mostly around near-term box office uncertainties, we continue to see an opportunity for the shares to reflect a potential return to pre-pandemic (adjusted earnings before interest, taxes, depreciation, and amortization) levels in the coming years."

The brokerage has neutral ratings on AMC and Cinemark (CNK) amid "concerns with the difficult quarterly comparisons in a down box office environment and the belief this could potentially weigh on valuations," according to the note. B. Riley is buy rated on the Imax ( IMAX ), Marcus (MCS) and National CineMedia ( NCMI ) stocks, led by the potential for "other factors" to counter box office challenges and support 2024 results and underlying valuations.

B. Riley said it's "comfortable" with its 2024 domestic box office outlook of $8.5 billion, which is expected to ramp to $9.9 billion next year amid various films that were delayed into 2025 due to the Hollywood strikes. "While we remain optimistic around underlying moviegoing demand and the opportunity for significant profitability gains next year, we acknowledge the near-term film slate risk remains a concern," Wold said.

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