IMAX Analyst Bullish On Stock As Box Office Revenue Shows Strong Recovery

Barrington Research analyst James Goss reiterated Imax Corp IMAX shares with an Outperform rating and a $24 price target.

According to the analyst, the quarter faced a comp against "Top Gun: Maverick," one of the top films of all time domestically. 

Further, IMAX continued to over-index its share of box office versus pre-COVID-19 pandemic trends.

The company expects to achieve 2019 levels of total box office, said the analyst, with the growth in international markets including a heavy dose of local language films and continued preference for a premium experience from audiences supporting overall box office gross.

The company announced signings for installing 84 screens so far in 2023. Further expansion in markets with solid PSAs may create some PSA pressure yet remain supportive of total IMAX box office growth.

Revenues were $98.0 million and above estimates with revenue growth partly due to installation activity with upgrades and new locations.

EBITDA of $32.8 million was up meaningfully from the year-ago $25.4 million. EPS was $0.26, topping his $0.22 estimate.

Gross continued valuing an IMAX box office recovery that had been especially strong in North America and should improve in China as markets reopen. By offering an in-home experience branded IMAX Enhanced on televisions via a partnership with DTS (XPERI), Goss said it presented some potential long-term incremental benefits.

The company also offered to repurchase the remaining public interest in IMAX China, which it feels provides an attractive premium from prior levels.

Goss estimated IMAX revenue improving to roughly $385 million in 2023. He expected the box office to build as a steadier stream of content is released in theatres and for installations to continue to pick up.

The analyst estimated EPS at $0.89. He forecasted a 2023 IMAX box office of $1.05 billion. By comparison, 2022 IMAX B.O. was $849 million, and 2019 pre-pandemic was $1.11 billion.

Goss included IMAX on his Barrington Research Best Ideas List.

IMAX Price Action: IMAX shares traded lower by 0.95% at $18.67 on the last check Friday.

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