Imax Stock Rises Amid Wedbush’s ‘Outperform’ Rating – The Hollywood Reporter

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Imax, which just reported third-quarter results, saw its stock price jump on Friday as investors see the movie tech company as perhaps better positioned than its exhibition partners to benefit from a continued recovery. at the Hollywood box office.

“We see Imax as the best way to play the theatrical rebound ahead, best positioned to take advantage of consumers’ continued shift towards high-end theatrical equipment, a solid way to position for a rebound in the economy. China, and longer term, best positioned to capitalize on alternative theatrical content,” Wedbush analysts Alicia Reese and Michael Pachter said in a Nov. 11 investor note that gave the company an “outperform” rating. Imax with a price target of $20.

Shares of Imax climbed 68 cents, or 5%, to $14.44 Friday at 11:30 a.m. PST. Wall Street bulls are betting on a near-term rise in Imax’s stock price with the release of Black Panther: Wakanda Forever and the Avatar: The Way of the Water sequel as a potential box office boon for the movie tech company.

“The forthcoming release of Avatar 2 should be the main catalyst going forward for Imax shares, as the company has been laying the groundwork ahead of this movie for years,” Wells Fargo analyst Steven Cahall said in a Nov. 1 note to investors, but he cut his price target for Imax shares of $26. at $21, while reiterating his overweight rating.

The narrative of a continued box office recovery for Imax is complicated by China, where the company is heavily invested and where regulators in Beijing have cut Hollywood’s access to the world’s second-largest theatrical market.

“As we look to 2023, we see a deeper list of blockbuster films. However, China (where Imax owns 48% of its screens and produces 35%-40% of its revenue) remains enigmatic with its zero-tolerance COVID policy and an uneven pattern of theater industry openings/closures,” said said MKM Partners analyst Eric Handler in his Nov. 1 investor note.

Tight censorship control in China and strict COVID-zero policies have forced Imax to play more local-language titles and fewer Hollywood tentpoles on its roughly 800 screens there. B Riley analyst Eric Wold cut his own price target to $20, in part due to an uncertain timeline for future theater installations in China, while reiterating his own buy rating of shares in the prospect of a continued recovery at the Hollywood box office.

“As we approach an impressive slate of 2023 films with a product that has been labeled an affordable luxury during the toughest times, we believe Imax is well positioned to approach previous box office records ahead of the rest. of the exhibition industry,” Wold said in a Nov. 1 note investors.

The continued rally in Imax’s share price is seen in part as Wall Street’s bet that China easing controls — COVID-19, censorship and the like — will allow more tents to show up on its giant screens. After the recent closure of the Chinese Communist Party Congress, investors also seem hopeful that Chinese regulators will ease requirements for high-earning Hollywood imports as COVID lockdowns lift and the lineup of Chinese films deemed politically acceptable widens. expands.

“The only thing to really look at is Avatar in the fourth quarter because I think if Avatar works according to our expectations, and also enters (in China) as we think is more likely than not, that very quickly it will change the narrative in China and the narrative around the introduction of non-Chinese films in China”, Imax CEO Richard Gelfond told analysts on an Oct. 31 call after the release of his company’s latest results.

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