AMC Entertainment Holdings Inc (AMC  ) began trading on a split-adjusted basis Thursday. Although the stock is plunging as shareholders push back against the reverse split and APE conversion, one analyst upgraded the movie theater chain stock.

What Happened: Wedbush analyst Alicia Reese upgraded AMC from an Underperform rating to a Neutral rating and set a price target of $19, noting that shares are now trading near the company's previous price target.

The Wedbush analyst believes the company is particularly well positioned heading into its third-quarter report and she expects the stock to benefit from improving box office trends longer term.

"We think AMC is well-positioned against an improving industry backdrop. We expect 2023 North American box office to end up 20% over 2022, or ~78% of 2019 box office, with AMC at least maintaining its 22% market share if not expanding with its vast network of premium large format screens," Reese said in a new note to clients.

AMC stands to benefit as moviegoers increasingly opt for premium viewing options, which includes larger movie screens and high-margin concessions, the analyst said, adding that European box office trends are also poised for improvement as AMC upgrades theaters overseas.

Reese expects AMC shares to settle around $19 per share in the near term, but noted that the company's third-quarter report could help put a more positive light on the theater chain.

The domestic box office is up 32% so far compared to last year and up 11% over the same period in 2019, driven by strong demand for the Barbie and Oppenheimer films. By the end of the quarter, Wedbush expects numbers to be up approximately 50% year-over-year. AMC is not due to report quarterly earnings until November.

"AMC has been trading at a significant premium to its historical multiple driven by the large ownership share of retail shareholders who seemingly disregard AMC's fundamentals and peer comparisons. We think that eventually, AMC is likely to go back to its 7 - 9x historical multiple range. However, we think there is still enough retail support for AMC shares to maintain a relative premium to industry peers," the analyst said.

AMC Price Action: AMC shares were down 26.2% at $14.47 at the time of publication, according to Benzinga Pro.