IMAX Corporation is favorably positioned within the theatrical exhibition sector as its success is solely dependent on blockbusters which are driving the lion’s share of the global box office, according to analysts at Wedbush Securities.
This, coupled with IMAX’s global screen growth potential, and IMAX’s revenue should continue to expand for the next several years, the analysts added.
In a note to clients after IMAX’s fourth quarter 2022 results, the analysts reiterated their ‘Outperform’ and US$22 price target for IMAX stock based on a 9x EV to earnings before interest, taxes, depreciation and amortization (EBITDA) multiple of their 2025 EBITDA estimate.
IMAX shares had climbed about 7% at US$18.23 on Thursday afternoon.
4Q results in line with expectations with trends improving in 2023
For the fourth quarter, IMAX reported revenue of $98 million, roughly on par with the analysts' estimate of $99 million and ahead of the consensus expectation of $95 million.
Adjusted EBITDA was $28 million compared to their estimate of $34 million and the consensus expectation of $29 million, the analysts noted.
Looking forward, Wedbush’s analysts said they think IMAX can roughly double its screen base, and screen growth should accelerate beyond 2023 as theaters return and have more disposable cash to upgrade theaters.
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“IMAX is now pointed to print consistent and expanding profitability, which should once again command a premium multiple,” the analysts wrote.
“IMAX has plenty of screen growth runway remaining in Asia, Europe, the Middle East, and Africa (EMEA), and the Latin America region (LatAm), and after its recent success with Avatar, theater owners are lining up to install its premium screens.”
IMAX remains on Wedbush’s Best Ideas List, the analysts noted, given their view that IMAX was the best way to play the theatrical rebound in 2023 and the best positioned to gain from consumers’ ongoing shift toward premium theatrical amenities.
They also pointed out that IMAX was a solid way to position for the ongoing economic rebound in China and over the longer term and the best positioned the gain from theatrical alternative content.
Contact the author at emily.jarvie@proactiveinvestors.com
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