Can IMAX Stock Rebound After a Huge Selloff?


IMAX Corporation (NYSE:IMAX) shares have been declining steadily over the last twelve months; stock plunged from$ 41 a share in fiscal 2015 to around $20 at present. The IMAX stock has the 52-week range of $17.58 – $34.35 with the market cap of just above $1 billion. Slower than expected revenue growth and declining earnings potential is among the biggest contributors for its share price selloff in the past three years.

Its revenue increased only 6.13% in the last five years while operating margin and earnings fell at a robust pace of 17% and 43%, respectively.

Despite a sharper selloff in stock price, analysts see a strong uptrend in the days to come, supported by the company’s expansion strategy and investments in growth opportunities. MKM Partners has recently raised its stock rating to ‘Buy’ and provided a price target of $30.


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JP Morgan also expects IMAX shares to rebound in the days to come, driven by IMAX’s new revenue-boosting strategies. JP has set the price target of $28 with “Overweight” rating.

Stronger Than Anticipated U.S. box Office Supports IMAX Revenue Growth

The company has topped revenue and earnings estimates for the fourth quarter of FY2017 by a wide margin of $4.35 million and $0.08 per share. Its revenue of $125 million in the latest quarter jumped 17% from the previous year period.

The company achieved fourth-quarter global box office growth of 17%, while domestic box office soared 17% from the same period last year. It’s both network and theater business segments posted respectable year over year growth in the latest quarter.

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We saw tangible improvements to box office performance and operating leverage in the second half last year, largely the result of our implementing several initiatives aimed at refining our programming strategy and containing costs,” said Richard L. Gelfond, IMAX CEO.

The company expects to enhance its earnings potential through reduced spending on non-core businesses and R&D activities. IMAX shares have also been receiving support from its valuations – which are below than the industry average.

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About the author: Based in Saudi Arabia, Siraj has a strong understanding of and passion for accounting and finance. He has worked for international clients for many years on several projects related to the stock market, equity research and other business, accounting and finance related projects. Siraj is a published financial analyst on the world's leading websites including SeekingAlpha, TheStreet, MSN, and others.