IMAX wins target raise from Roth Capital

Box office momentum is building for IMAX Corp (IMAX Corp Stock Quote, Charts, News, Analysts, Financials NYSE:IMAX), according to Roth Capital Partners analyst Eric Handler, who issued a company note on Friday where he reiterated a “Buy” rating on the stock and increased his 12-month target from $24 to $26 per share. Reviewing the company’s latest quarterly numbers, Handler said the IMAX story is becoming more well-rounded.

“2023 is off to a strong start as 1Q results exceeded consensus estimates and box office momentum is carrying over nicely into 2Q. In addition, we are becoming more positive toward IMAX’s big picture (no pun intended) due to the success seen with its film diversification strategy, its expanding global footprint, and the re-acceleration in the number of system signings,” Handler wrote.

IMAX shares climbed almost five per cent on Friday after the movie and entertainment tech company released its first quarter 2023 earnings, which featured revenue up 45 per cent year-over-year to $86.9 million and adjusted EBITDA up 84 per cent to $27.3 million. (All figures in US dollars.)

The company said the Q1 was its highest grossing first quarter ever and a record global box office at $273 million. As far as setting up new IMAX systems goes, it said it has already struck more deals for new and/or upgraded systems worldwide than it did in all of 2022.

In his comments, CEO Richard Gelfond said IMAX’s brand is now very much global, with many new deals coming from international markets and now one-third of its global box office coming from non-Hollywood films.

“We remain confident we will drive significant growth in 2023 across global box office, system signings, installations, and adjusted EBITDA. And the rapid acceleration of sales activity is a very positive indicator for long-term growth across our global network, box office, and financial results,” said Gelfond.

Handler said IMAX’s $87 million topline was above his forecast at $81 million and the consensus at $79.5 million, while EBITDA at $27 million was in line with his estimate and above the Street at $25 million.

Handler noted that the Q1 upside largely came from the Technology Products & Services segment, i.e., business from theatre partners, as a result of seven system sales versus his projection of four, along with unexpectedly strong contract renewal activity.

Moreover, Handler likes IMAX’s film diversification strategy, where local language movie revenue has been steadily increasing, post-pandemic, and the company continues to expand in a number of international markets.

“The success of local language movies is helping IMAX achieve record market share in many international markets,” Handler wrote.

Year-to-date, IMAX shares are up 43 per cent, while at the time of publication, Handler’s new $26.00 target represented a projected return of 30 per cent.