3 Reasons To Own IMAX Shares For The Long Term
In what he described as a “draconian view,” MKM Partners analyst Eric Handler reiterated a Buy rating on Imax Corp (USA) (NYSE: IMAX) and cut its price target from $40 to $30.
The $30 price target still reflects a 41-percent upside from the low-$21 range IMAX shares were trading at intra-day Thursday.
“We recognize investors have grown tired of overly optimistic sellside global box office projections and more often than not of late, downward estimate revisions,” said Handler in a note (see his track record here). The stock is at its lowest level since December 2012.
Related Benzinga Pro Headline: 3G Filing Shows Primecap Mgmt Reporting 8.29% Stake In IMAX
Conservative Revisions
The analyst cut his estimated 2017 global box office sales by 18 percent to $959 million, about flat year over year.
He also assumed no increase in average revenue per screen in 2018 and is not considering any savings from the company’s $20 million cost cutting plan.
The result of which is a 2017 revenue estimate reduced from $424 million to $373 million and adjusted EBITDA down from $136 million to $100 million. Both of which went from above consensus to below.
Estimates for 2018 were likely slashed, down to $415 million in sales and $128 million adjusted EPS down from $451 million and $162 million respectively.
“In our view, this outlook should hopefully prove conservative given what appears to be a stronger film slate for IMAX screens,” said Handler.
Long-Term Growth Is Still Possible
Despite these significant downward revisions, the company still warrants a Buy rating because of three drivers:
Besides long-term development strategies, IMAX benefits from its strong balance sheet. The company currently has $190 million in cash and no noteworthy debt, which will allow for its second $200 million share buyback.
Related Links:
Analyst Gives IMAX Two Thumbs Down On Weak Q2 Box Office
Movie Theater Stocks Tumble Following Bearish Comments From A Credit Suisse Analyst
Latest Ratings for IMAX
Jun 2017 | Benchmark | Downgrades | Buy | Hold |
Feb 2017 | Credit Suisse | Downgrades | Outperform | Neutral |
Nov 2016 | Credit Suisse | Assumes | Outperform |
View More Analyst Ratings for IMAX
View the Latest Analyst Ratings
See more from Benzinga
© 2017 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
