On Tuesday, B.Riley adjusted its outlook on IMAX Corporation (NYSE:IMAX), increasing the shares target from $30.00 to $33.00 while maintaining a Buy rating on the stock.
The decision follows a recent investor call with IMAX's top management, which provided deeper insights into the company's strategic position within the film industry.
During the call on Monday, IMAX executives, including CEO Rich Gelfond and CFO Natasha Fernandes, outlined the significant leverage the company has established with studios, exhibitors, and consumers.
This leverage is seen as a key driver for IMAX's ability to secure better terms with studios, help exhibitors capture more market share, and offer consumers an unparalleled movie-watching experience.
The firm's analysis suggests that IMAX is well-positioned to continue increasing the number of its system installations, which is expected to expand the global total addressable market (TAM).
The analyst anticipates that these factors will contribute to IMAX achieving AEBITDA margins that exceed current forecasts, which could, in turn, lead to an upward revaluation of the company's stock.
B.Riley highlighted IMAX's performance compared to broader market indices, noting that since their early-October industry quarterly preview note, IMAX shares have risen approximately 20%, outperforming the roughly 11% gain of the Russell 2000. This strong performance has solidified IMAX's status as the firm's top sector pick for 2025.
The raised price target to $33 from $30 reflects the firm's confidence in IMAX's growth trajectory and its potential for increased profitability and market share gains in the coming years.
In other recent news, IMAX Corporation has reported strong financial performance in its Q3 2024 earnings call, exceeding market expectations. The company's adjusted EBITDA reached $39 million, a 42% margin, and earnings per share (EPS) stood at $0.35, surpassing forecasts by over 50%. Revenue for the quarter was reported at $91.5 million, driven by major titles and content solutions.
The company also highlighted significant growth in system installations, with a forecast to reach between 130-150 by year-end. Looking ahead, IMAX anticipates a global box office exceeding $1.2 billion in 2025, supported by a strong film slate.
On the financial front, the company's capital position remains robust with $105 million in cash and $280 million in debt, and a liquidity exceeding $410 million. Despite a decline in system rentals and economic challenges in China, IMAX remains optimistic about future growth, driven by increasing demand for the IMAX experience.
InvestingPro Insights
IMAX Corporation's recent performance aligns with B.Riley's optimistic outlook. InvestingPro data shows that IMAX has experienced a strong 23.89% price return over the last three months, and an impressive 48.11% return over the past six months, corroborating B.Riley's observation of the stock's outperformance.
The company's financial health appears robust, with InvestingPro Tips indicating that IMAX's liquid assets exceed short-term obligations and it operates with a moderate level of debt. This financial stability supports the potential for continued system installations and market expansion as highlighted in the analyst call.
However, investors should note that IMAX is trading at a high earnings multiple, with a P/E ratio of 55.55. This valuation suggests the market has high growth expectations for the company, in line with B.Riley's positive outlook.
For a more comprehensive analysis, InvestingPro offers 12 additional tips for IMAX, providing deeper insights into the company's financial position and market performance.
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