There's More Than Just IMAX's China IPO, Stifel Says

In a report published Wednesday, Stifel analyst Benjamin E. Mogil maintained a Buy rating on Imax Corporation IMAX, with a target of $45, after the company's investor day. Imax reiterated its financial guidance besides hinting at an earlier-than-expected China IPO timeline of early fall, viewed as positive by analyst Benjamin E.Mogil. The company also raised its total film zone estimate to 2,450 zones from 1,700 zones, with the bulk of the growth (600 zones) from China. Imax's share price is expected to be driven by the valuation expectations for the China subsidiary. "The company has limited joint venture renewals in the near term and noted that past deals have been staggered to reduce lumpiness of renewals, which we view as positive. The company will have around 25 renewals a year starting in 2018 to 2020 with 59 renewals in 2021," Mogil mentioned. Imax's expanded alternative programming and programming flexibility capabilities are expected to allow the company to accelerate the process of having second screens in key North American zones. Although the company's home entertainment initiative is ambitious, the capital investment is limited. The initiative is not a "material driver in the near-to mid term," the report stated.