IMAX Soars Following Upbeat Q2 Results: Analysts Bullish on Theatrical Rebound and Global Expansion

Imax Corp IMAX stock is trading higher Thursday following upbeat Q2 results.

Wedbush analyst Alicia Reese reiterated Imax Corp IMAX with an Outperform and a $26 price target.

IMAX remains on Wedbush's Best Ideas List, given that IMAX is the best way to play the theatrical rebound as consumers' ongoing shift toward premium screens drives market share gains. It is a solid way to position the continuing economic rebound in China. 

IMAX is expanding its relevance globally by leaning into local-language content (30 – 40 titles expected in 2023). Additionally, there is optionality with IMAX's SSIMWAVE technology, which could drive her estimates meaningfully higher down the road.

IMAX's global screen count should continue expanding for several years. The analyst expects China's rebound to continue throughout the year, ahead of IMAX's proposed acquisition of its unowned shares (28%) of IMAX China. She expects moviegoers to continue driving IMAX's market share higher as they increasingly opt for premium screens and the IMAX brand. 

IMAX beat expectations in Q2 and is poised to deliver over the second half of 2023 – 2024 if the studios can limit the length of the ongoing labor strikes.

Rosenblatt analyst Steve Frankel maintained Imax with a Buy and raised the price target from $27 to $30.

Despite some box office headwinds that clipped Q2's GBO, IMAX exceeded Q2 expectations, including a significant uptick in new signings and a growing backlog. 

The success of Oppenheimer sets the stage for a strong Q3 and reinforces the value of the IMAX brand. 

IMAX's premium movie-going experience is highly valued by studios, consumers, and exhibitors across the globe, a phenomenon that is yet to reflect in the stock's current valuation. Given the strength in Q2 and the set-up for the year's balance, Frankel raised his estimates and increased the price target.

Benchmark analyst Mike Hickey reiterated a Buy with a price target of $23.

IMAX's financial outcomes for 2Q exceeded anticipated benchmarks, beating consensus estimates for revenue and profitability. The company is favorably poised to benefit from imminent blockbuster releases from Hollywood and international platforms, thanks to the rising popularity of the IMAX experience. 

Given IMAX's global premium brand stature, CEO Rich Gelfond's extensive tenure, and the current undervalued EV-to-AEBITDA ratio, which does not fully encompass the post-pandemic revival and future growth potential, the company strongly emerges as a viable acquisition prospect. 

The proposed takeover of IMAX China, slated for completion by the close of this year, only augments its attractiveness as a takeover target. It is plausible that IMAX might be a potential acquisition target for significant entities in the technology, media, or retail industries. 

While the ongoing labor strike may precipitate potential delays in releasing upcoming blockbusters, negatively impacting near-term results, he views any consequent share price decline as an investment opportunity—furthermore, this year's brisk pace of system signings and installations signals promising long-term growth. 

Barrington Research analyst James C. Goss reiterated an Outperform and a price target of $24.

Revenue growth was partly driven by installation activity with a mix of upgrades and new locations, including the quick rollout of the Aeon signing in Japan earlier this year.

The quarter faced a comp against Top Gun: Maverick, one of the top films of all time domestically. While this level is somewhat below the 2019 trends, the Avengers is a particularly challenging comp. 

The company has announced signings for installing 84 screens so far in 2023, as exhibitors, with improving fundamentals, seek to invest in those experiences that have generated the most robust consumer enthusiasm in recent quarters. IMAX is on the Barrington Research Best Ideas List. 

Price Action: IMAX shares traded higher by 8.98% at $18.92 on the last check Thursday.