Trending >

IMAX is oversold, says Canaccord Genuity

IMAX

IMAX Ahead of its second quarter results, Canaccord Genuity analyst Aravinda Galappatthige thinks the selloff in shares of IMAX (IMAX Stock Quote, Chart, News: NYSE:IMAX) is overdone.

On Wednesday, July 26, IMAX will report its Q2, 2017 results. Having already confirmed that the Q2 box office number was $268.8-million, Galappatthige points out that most of the damage has already been done, in the form of a pronounced share price swoon that began in April. He believes the soft numbers had some revisiting their long-term assumptions about the stock.

“Given the elevated expectations that investors had for Q2 with initial box office estimates in the $330-340M range, the disappointment as the box office numbers trickled in led to the stock falling a staggering 40% since April 1, 2017,” the analyst notes. “As we have discussed in our June 8 note, in which we attempted to offer up a more wholesome picture of IMAX’s recent challenges and stock reaction, the steep downturn was due to the fact that the market (ourselves included) was anticipating a strong turnaround in box office trends starting Q2/17 following an extended period of declines. When Q2 came in soft against that backdrop, we suspect that it forced investors/analysts to re-evaluate their longer-term assumptions around PSA, which consequently led to target price reductions.”

In a research update to clients today, Galappatthige maintained his “Buy” rating and one-year price target of (U.S.) $33.00 o IMAX, implying a return of 63 per cent at the time of publication.

Galappatthige thinks IMAX will post Adjusted EBITDA of $119.9-million on sales of $376.4-million in fiscal 2017. He expects those numbers will improve to EBITDA of $151.7-million on a topline of $416.6-million the following year.

  •  
  •  
  •  

About The Author /

Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.

Comment

Leave a Reply

Your email address will not be published. Required fields are marked *