IMAX Stock Lags Despite Coming ‘Stars Wars’ Windfall

Investors undervaluing stock says B. Riley analyst Eric Wold, who sets price target at $52 per share


“I find your lack of faith disturbing,” Darth Vader said in the original “Star Wars.” Executives at IMAX Corp. might feel the same way about Wall Street, since investors have remained cautious on the company’s fortunes despite the giant-movie-screen company’s apparently imminent bonanza.

“IMAX is the best-positioned company within the exhibitor group to benefit from the expected strength of ‘Star Wars: The Force Awakens’ due to its global presence and attractive box office licensing model,” B. Riley analyst Eric Wold told TheWrap.

“That, coupled with the current major disconnect between its shares and those of IMAX China should have pushed IMAX shares into the mid-$40s at a minimum.”

His firm reiterated its Buy ratings and set a $52 price target for the company’s stock, which has been trading in the $38 range (it closed Thursday at $38.21).

Since the IPO on October 8, shares of IMAX China have increased by 76 percent, while shares of the parent company have only increased by 10.6 percent.

Considering that China represents roughly a third of IMAX’s revenues and the parent company retained a 68.5 percent stake in IMAX China, the gap shouldn’t get much wider, Wold said. The IMAX China stake is currently worth $1.72 billion.

Why more investors haven’t hopped onto the Millennium Falcon bandwagon stumps Wold.

“Not only do we project ‘Star Wars 7’ will represent one of IMAX’s top 5 grossing films and generate as much as $140 million in global IMAX box office over its run, but the late December release and early January release in China will help to drive the out-performance in both Q4 and Q1,” he said.

Nearly one-third of the record $50 million in advance ticket sale for “Star Wars: The Force Awakens” have been for IMAX, he noted.

Prospects were strong for next year as well Wold said, projecting revenue growth of between 6 and 12 percent.