Actions of entertainment technology specialist IMAX (NYSE: IMAX) jumped to 9.8% higher on Tuesday. The company reported strong results for the Chinese New Year holiday this weekend, followed by some bullish analyst notes.
IMAX projections grossed a record $ 25 million over the Chinese New Year weekend. This is an increase of 45% from the previous record, set two years ago. Theaters were closed during this important holiday in 2020 due to the COVID-19 pandemic. This year’s strong result was achieved despite coronavirus security restrictions that limit Chinese cinemas to filling no more than 75% of their installed seats.
Benchmark analyst Mike Hickey reiterated his buy rating on IMAX shares, raising his price target to $ 22 per share. Macquarie analyst Chad Beynon highlighted his outperformance rating on the stock with a target price of $ 24 per share. Analysts say IMAX is a solid performer as long as theaters are open to the public and safe. The company also has a large backlog of theater facilities to work with and a premium brand. Beynon currently considers IMAX to be the best investment in physical theaters.
Cinema channels are hard to love these days, but IMAX may be the only exception to this rule. The company’s record results in the important Chinese market are associated with a reasonably strong balance sheet, where long-term debt is roughly equal to IMAX’s cash balance. AMC Entertainment Holdings and Cinemark cannot rely on Chinese demand and they are drowning under multibillion dollar piles of debt. And, as this week’s optimistic analysts noted, the larger-than-life IMAX experience is more valuable than the standard theater model, which is easier to replace with a bucket of popcorn on your own couch. .
I’m not exactly looking forward to buying IMAX stock today, but it’s the one movie chain stock that’s worth serious consideration. It is not surprising to see the title climb to an impressive performance in the Chinese market.
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