MW People are ignoring streaming and TV ads. This company is capitalizing on that.

By James Rogers

National CineMedia is 'putting various measures in place to gain advertising market share,' according to Wedbush analyst

In-theater advertising company National CineMedia Inc. is well-positioned to reap the benefits of cinema's unique proposition to advertisers, as well as changes to the company's board structure, according to analysts.

Analyst firm Wedbush upgraded National CineMedia (NCMI) to outperform from neutral Friday, citing a strong box-office environment from the second quarter of 2025 through 2026 and its ability to deliver eyeballs to advertisers. TV advertising dollars are shifting toward "highly targeted advertising mediums like cinema," according to Wedbush analyst Alicia Reese, who notes that National CineMedia is "putting various measures in place to gain advertising market share."

On Thursday the company launched Bullseye, a targeted, artificial-intelligence-powered digital analytics tool for advertisers, and also hosted its investor day in New York City. During the event, the company said that the average age of its audience is 30, and that its audience is 62% multicultural - both key demographics for advertisers.

Related: National CineMedia is bringing back its dividend less than 2 years after bankruptcy. Here's why.

Catherine Sullivan, president of sales, marketing and partnerships at National CineMedia, also described the limited options that streaming presents to advertisers. "As you look at the actual opportunity for advertisers, less than 15% of an ad opportunity sits within streaming right now," she said, according to a FactSet transcript. "I'm sure most of you have streaming subscriptions that do not have advertising in it."

Sullivan highlighted the way people consume ads in a movie theater compared with on their devices. "Attention is so hard to get," she said. "The competition that you have, going up against just people scrolling and feed, is wild. And then in juxtaposition of that, you have people in theaters who put their phones away and are paying attention, and you're now actually impacting that microsegment or that target audience at the physical location that they've chosen to be at."

In note released Friday, analyst firm Benchmark highlighted cinema's advertising advantage over streaming. "With less than 15% of streaming ad inventory available, brands face limited reach and engagement in digital," analyst Mike Hickey wrote. In contrast, cinema offers a high-attention, distraction-free setting, he said, noting that 93% of moviegoers watch ads with the sound on, compared with 24% on digital platforms. Hickey also cited National CineMedia's investor day comments that moviegoers spend three times more money following a visit to the movie theater. This, he wrote, reinforces "cinema's ability to drive brand impact and consumer action."

Related: This cinema-related stock is up 77% this year amid box-office rebound. It's not AMC or Cinemark.

The company was started in 2005 as a joint venture between movie-theater chains AMC Entertainment Holdings Inc. $(AMC)$, Cinemark Holdings Inc. $(CNK)$, Regal Cinemas and what would become National CineMedia. It went public in 2007 with 52% of its ownership controlled by AMC, Cinemark and Regal. At the board level, the three companies also controlled a significant amount of the voting rights.

National CineMedia is a much different company today, CEO Tom Lesinski said during the investor day event. "It is now controlled by the shareholders completely," he said. "The exhibitors do not have a board seat at our company anymore. Importantly, though, during all this we retained all those long-term valuable contracts that we have with AMC, Cinemark and 50 other exhibitors."

In his note, Benchmark's Hickey highlighted the importance of the company's transition from an exhibitor-controlled entity to a shareholder-focused company. "This shift provides greater strategic flexibility and stronger corporate governance," he wrote.

Related: AMC poised for 'multiyear recovery' fueled by strong 2025 film slate, says analyst

Benchmark, which has a buy rating for National CineMedia, added the in-theater advertising company to its Best Ideas list.

All of the four analysts surveyed by FactSet have a buy rating for National CineMedia.

National CineMedia's stock has risen 40% in the last 12 months, outpacing the S&P 500 index's SPX gain of 7.2%. Shares of movie-theater chain Cinemark have risen 26.6% in that period, while AMC's stock has fallen 33.5%.

-James Rogers

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March 14, 2025 09:35 ET (13:35 GMT)

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