On Friday, Macquarie demonstrated continued optimism for IMAX Corporation (NYSE:IMAX), increasing the company's price target to $26.00, up from the previous $26.00, while reiterating an Outperform rating on the stock. The firm's analyst highlighted IMAX as a standout choice within the small-cap Gaming/Lodging/Leisure sector, emphasizing the company's potential for growth driven by its project backlog, improving margins and free cash flow (FCF), as well as its strong position to benefit from an upcoming slate of blockbuster films.
IMAX's ability to leverage its global brand and proprietary technology was noted as a key factor that could enable the stock to trade at multiples higher than 20x price-to-earnings (P/E). The analyst's assessment suggests a robust future for IMAX, backed by its solid fundamentals and the potential for stock performance.
The analyst also drew attention to IMAX's current valuation, pointing out that the stock is trading at approximately 8 times the firm's estimated 2025 earnings before interest, taxes, depreciation, and amortization (EBITDA). This is compared to a historical trading range of 13 times EBITDA observed between 2012 and 2017. This comparison underlines the analyst's view that IMAX shares have room to grow based on past market performance.
The maintained Outperform rating indicates that Macquarie expects IMAX to continue outperforming the general market or its sector in the foreseeable future. This positive outlook is rooted in the company's financial health and strategic position within the entertainment industry.
IMAX Corporation, known for its immersive theater technology, has been a key player in the cinema industry, providing audiences with enhanced movie-going experiences. The company's stock performance is often tied closely to the success of major film releases and the overall health of the entertainment sector. With a strong pipeline of blockbuster movies ahead, IMAX is poised to capitalize on the expected surge in theater attendance as the industry continues to recover.
In other recent news, IMAX Corporation has been actively expanding its global footprint with significant partnerships in Saudi Arabia and the Philippines. The company has joined forces with muvi Cinemas, Saudi Arabia's leading cinema operator, to introduce four new IMAX with Laser systems in the country. This partnership will see two systems installed in Riyadh, one in Jeddah's Mall of Arabia, and another in Dhahran, with three venues expected to open by the end of 2024 and the final one in 2025.
Simultaneously, IMAX has expanded its longstanding partnership with SM Cinema in the Philippines. This collaboration includes the installation of 10 advanced IMAX with Laser systems across the SM Cinema network, introducing the IMAX Experience to three new locations and upgrading seven existing systems. Three locations are slated to open this year, with the remaining ones expected to be operational by the end of 2026.
These recent developments are part of IMAX's strategic growth plan, with Saudi Arabia and the Philippines ranking among the top 30 highest-grossing IMAX markets worldwide. IMAX with Laser technology, promising a superior movie-going experience with 4K laser projection and a broader color spectrum, plays a crucial role in these partnerships. Both muvi Cinemas and SM Cinema aim to provide high-quality, immersive cinematic experiences to their audiences, aligning with IMAX's commitment to innovation and excellence in entertainment technology.
InvestingPro Insights
Macquarie's positive outlook on IMAX Corporation is further supported by real-time data and insights from InvestingPro. With an adjusted market capitalization of $1.05 billion, IMAX is navigating the market with a P/E ratio of 48.61, which, while high, aligns with the analyst's expectation of the stock trading at multiples higher than 20x. The company's PEG ratio for the last twelve months as of Q2 2024 stands at a compelling 0.13, indicating potential undervaluation relative to its earnings growth.
InvestingPro Tips highlight that two analysts have revised their earnings upwards for the upcoming period, reflecting a positive sentiment towards the company's financial prospects. Additionally, IMAX's strong performance is evident with a significant return over the last week of 9.36%, underscoring the stock's recent momentum. These metrics are particularly relevant as they echo Macquarie's emphasis on IMAX's growth potential and the ability to leverage its global brand and proprietary technology.
For readers interested in deeper analysis and additional insights, InvestingPro offers more tips on IMAX, which can be accessed at https://www.investing.com/pro/IMAX. Use the promo code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, and discover numerous other InvestingPro Tips that can help inform your investment decisions.
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