Shares of MoviePass majority owner Helios and Matheson (HMNY) were trading higher after an analyst at Canaccord initiated coverage of the stock with a Buy rating, noting that MoviePass provides a growth vector for a “challenged” theater sector.

WHAT’S NEW: This morning, Canaccord Genuity analyst Austin Moldow started Helios and Matheson with a Buy rating and $15 price target. The analyst said his firm views movie theater seats like airline seats or hotel rooms, with a near-zero marginal cost to filling one but a major revenue miss if left empty. Moldow estimates that just 15% of theater seats in the U.S. are filled each year, and the MoviePass subscription product provides a mechanism for aggregating demand and creating a new profit pool to share with exhibitors. The analyst said he expects “rapid growth” of MoviePass to continue, with the srvice having attracted 2M subscribers in just six months since relaunch, and the firm is forecasting 12M subs by 2022. In addition, Moldow believes that MoviePass should evolve to yield considerable bargaining power, which should drive costs low enough to help flip the “currently negative” gross margin profile.

WHAT’S NOTABLE: Last week, Helios and Matheson said that it had increased its total ownership stake in MoviePass to 78%. The information technology services company said that such “cash advances to MoviePass were used to support MoviePass’ working capital operational requirements, as well as to support the expansion of MoviePass’ business plans and objectives.” The move came a week after MoviePass cut its subscription price to $7.95 per month from $9.95.

PRICE ACTION: Just after midday, shares of Helios and Matheson are up 4.1% to $4.68.