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IMAX (IMAX) to Capitalize on Studio Leadership Changes and Local Content - Piper Jaffray

November 23, 2015 8:02 AM EST
Get Alerts IMAX Hot Sheet
Price: $16.17 +0.06%

Rating Summary:
    12 Buy, 6 Hold, 2 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 0 | Down: 0 | New: 0
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Piper Jaffray analyst, James Marsh, published a note highlighting the opportunity for IMAX (NYSE: IMAX) to pick up share as studios, under new management look for nontraditional content. In addition, there is little real competition which will drive the studios to IMAX.

The model is pivoting from selectivity and scarcity to increased supply and improving demand driving higher profits.

Recent leadership changes at major studios and exhibitors could provide an opportunity to bolster supply (more content, more screens), which in turn should drive demand by consumers. Management changes at key studios, Disney (Alan Horn), Fox (Paul Hanneman and Chris Aronson) and potentially Warner Bros. studios (Silverman under pressure after a tough Summer box office) create opportunities for IMAX.

Local content is set to accelerate in 2016 with 10+ films in China, 3+ in Russia, a few in Japan and India, in addition to 8-10 international-only releases.

Domestic screen growth has recently lagged international deployments, but they see domestic re-accelerating. They are more bullish that management will begin to install second screens in key locations and/or add new zones allowing certain theaters to play different films, de-risking the model.

They expect the number of films shot with IMAX cameras to double over the next few years, as directors embrace IMAX's new digital cameras.

While the demand could build over the next year, the competitive environment remains benign. Much has been made of generic screens but there has been limited impact. The new Dolby system seemed to have some momentum but are stalled with only AMC rolling out in meaningful way. The firm's understanding is that Dolby's subsidy is substantial, which they believe is not likely sustainable given the cost of lasers. RealD’s 3D exclusivity clause (limits 3D competitors in theatres where RealD has licensed its technology, with only IMAX having an exemption) is also creating problems as the Dolby system can’t unspool 3D versions of films.

No change to Overweight rating or $45 PT.

For an analyst ratings summary and ratings history on IMAX Corporation click here. For more ratings news on IMAX Corporation click here.

Shares of IMAX Corporation closed at $38.12 yesterday.



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Piper Jaffray, James Marsh