IMAX shares jump as Piper Jaffray sees growth

IMAX shares jump as Piper Jaffray sees growth in screens, shares rising more than 40 pct

• On 1:35 pm EDT, Thursday October 29, 2009

NEW YORK (AP) -- Shares of IMAX Corp. jumped in Thursday trading after Piper Jaffray put its highest rating on the company, saying more theaters are likely to install its big screens as film distribution costs drop.

Improving digital technology is a boon to IMAX, analyst James Marsh said in a note to investors Thursday. He initiated coverage with an "Overweight" rating and $14 price target.

IMAX shares rose 89 cents, or 9.1 percent, to $10.68 in afternoon trading.

"We see a virtuous cycle as digital technology massively reduces film distribution costs, which encourages more films to be released in IMAX format and then drives more IMAX screen installs both domestically and abroad," Marsh wrote.

He also said major theater chains such as AMC and Regal Entertainment Group "seem pleased" with the new joint-venture business model they have with IMAX, and there is a strong backlog of deals.