Despite Imax's Q2 Miss, Analysts Still See Potential, Reiterate Ratings

Analysts hailed Imax Corp IMAX, although its Q2 consensus misses as the world gradually recovered from the pandemic.

Rosenblatt analyst Steve Frankel noted IMAX's solid Q2 results as it continues to gain market share. He saw the slate loaded with films that could drive additional market share gains and a strong box office.

Despite this set-up, Frankel saw that IMAX trades at less than 12x EV/'22 EBITDA, a level that fails to reflect the potential of its asset-light business model fully.

With a series of high-profile releases due in Q4 and 2023, Frankel reiterated a Buy and $25 price target, which reflects a multiple of 16x EV/'22 EBITDA, consistent with where the shares have traded in past cycles.

Barrington Research analyst James Goss acknowledged IMAX's solid recovery in global box office except for China closures. He saw that preference for premium theatrical experiences continued to benefit IMAX. 

Globally it generated $173 million at the box office. In North America, the box office was close to the 2019 level while capturing a more significant share of domestic box office versus that period.  

IMAX's global footprint indicated substantial room for growth, he noted. It installed seven new screens in Q2, down from 15 Y/Y. Further, the management aims to establish 80-100 theatres this year. It has also identified over 3,000 total IMAX zones as compared with roughly 1,600 screens currently installed.

Goss noted that IMAX's relationships with local content creators provide additional content options for consumers. 

In addition to its efforts to place more local language films onto IMAX screens and leverage global content production across its footprint, live events provide a potential opportunity to offer a differentiated experience via a network of more than 100 connected screens.

Goss reiterated an Outperform and $20 PT citing ample liquidity.

Price Action: IMAX shares traded lower by 3.50% at $16.81 on the last check Friday.