Is IMAX Corp Poised for a Big Rally?

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Written By Nathan Goldstein

IMAX Corp may be well-positioned to navigate the structural headwinds previously feared, such as competition from video-on-demand [VOD] and over-the-top [OTT] players like Netflix.

The evidence indicates that cinemas and content studios increasingly rely on IMAX to deliver premium experiences that consumers seek, creating a favorable cycle for IMAX.

Spotlight on Recent Data

Credits: DepositPhotos

Recent data shows a rebound in cinema attendance, countering concerns about a permanent decline due to competition from VOD and OTT services. According to a report by S&P Global, cinema attendance is improving, with AMC Entertainment reporting its most attended and highest grossing weekend since 2023.

The shift in consumer behavior is notable. Cinemas now offer not only new movies but also premium experiences that cannot be replicated at home. This aligns with the preferences of younger generations, who value experiences and are willing to pay more for them.

Large cinema operators have highlighted the success of their premium offerings in driving attendance:

Moviegoer sentiment is clear. Guests want to see movies on a huge silver screen, and they are consistently willing to pay more for the best possible experience…

…I hope that we can add more IMAX screens and Dolby Cinema screens. We are the largest IMAX exhibitor in the world outside of China, we’re the largest Dolby Cinema exhibitor in the world, we have about half of the IMAX locations in North America, we have all the Dolby Cinema locations in North America.

– AMC Entertainment Holdings 1Q24

This consistent outperformance is a direct result of our relentless efforts to elevate the guest experience and drive increased attendance and frequency through our alternative content and premiumization initiatives…

…In this quarter, 41% of box office revenue came from premium experiences like IMAX, UltraAVX, 3D and VIP.

– Cineplex Inc 1Q24

IMAX’s role in attracting consumers to cinemas creates a strong flywheel effect, drawing more studio content to IMAX screens, leading to more IMAX installations, and continuing the cycle.

Supporting data includes IMAX’s return to 2019 levels of global box office revenue, an increase in “filmed for IMAX” titles, and expanded partnerships with major exhibitors like Wanda Film in China.

The concerns about most systems being upgrades rather than new installations have been alleviated by recent data showing an increase in new IMAX systems installations. For instance, the number of new IMAX systems grew to 47 in 4Q23 and saw a 12% increase in 1Q24 compared to the previous year.


A detailed analysis of IMAX’s valuation now includes estimates through FY27e, projecting sustained high-single-digit growth driven by accelerating adoption. Although FY23 adjusted EBITDA margins were lower than previously modeled, the long-term outlook remains positive.

Assuming a return to historical average multiples of 11x forward EBITDA, the stock is estimated to be worth ~$23, with shareholders positioned to enjoy attractive upside even at the current 8x forward EBITDA.

Potential Risks

The current macroeconomic environment poses challenges, with consumers potentially cutting back on discretionary spending, including more expensive IMAX tickets. This could delay cinema installations of IMAX systems.

Additionally, the availability of good movie slates is crucial for maintaining high attendance, and a prolonged lack of quality films could negatively impact IMAX system adoption.

Final Thoughts

Credits: DepositPhotos

Re-evaluating industry trends has led to upgrading the rating on IMAX from hold to buy. The shift in cinema value propositions towards premium experiences creates a favorable cycle for IMAX.

Supported by strong data points and a healthy backlog of installations, investing in IMAX could yield good fruits, with a possible price target of $23.


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