B.Riley sets IMAX stock Buy rating with $36 target

Friday - B.Riley analysts have initiated coverage on IMAX Corporation (NYSE:IMAX) with a Buy rating, accompanied by a price target of $36.00, representing significant upside from the current price of $26.93. The stock has shown remarkable momentum, delivering a 59.07% return over the past year and currently trading near its 52-week high of $27.77. According to InvestingPro data, analyst consensus remains bullish with targets ranging from $16 to $35.

Analysts at B.Riley have increased their 2025 Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (AEBITDA) estimate for IMAX, building on the company’s current EBITDA of $94.45 million. This decision comes after observing China’s box office outperformance in the first quarter and strong system installations during the same period. These installations bolster confidence in the company’s ability to meet or exceed its annual target range for system rollouts. InvestingPro analysis reveals the company maintains a strong financial health score of 2.86, with liquid assets significantly exceeding short-term obligations (current ratio: 3.94).

The firm’s optimism extends into the second quarter, citing a robust domestic box office performance to date. This strength in domestic earnings, combined with the operating leverage that IMAX is experiencing, further supports the raised AEBITDA expectations.

Looking ahead to 2026, B.Riley has also raised its AEBITDA estimates for IMAX, citing better visibility and increased enthusiasm for the upcoming Hollywood movie calendar. Analysts highlight several factors contributing to their high conviction in IMAX’s stock. They point to a compelling content cycle with franchise tentpole movies and a record number of "Filmed For IMAX" titles that are expected to perform well in theaters. Additionally, the inclusion of more local language films is anticipated to provide geographic diversity and balance to the company’s film slate.

IMAX’s appeal is also attributed to its large, global Total (EPA:TTEF) Addressable Market (TAM) and the potential for accelerated demand for new system installations in markets that are currently under-penetrated. Moreover, a growing consumer preference for premium large-format (PLF) experiences in theaters is seen as a favorable trend for the company.

B.Riley analysts believe that these factors position IMAX to potentially reach or even surpass its pre-COVID AEBITDA levels as early as this year. They suggest that this performance justifies a pre-COVID valuation multiple of 12.0x, leading to their mid-$30s valuation for IMAX shares. While the stock currently trades at a relatively high P/E ratio of 55.54, InvestingPro offers 12 additional key insights about IMAX’s valuation and growth prospects in its comprehensive Pro Research Report, available exclusively to subscribers.

In other recent news, IMAX Corporation reported first-quarter earnings for 2025 that exceeded expectations, reinforcing confidence among analysts such as those from Texas Capital Securities. The firm maintained its Buy rating and a $36 price target, highlighting robust demand for new IMAX screen installations and strong consumer interest. Additionally, Benchmark analysts also reiterated their Buy rating with a $30 price target, citing IMAX’s expected financial growth due to its extensive film lineup and expanding premium exhibition network.

Despite rumors of a potential ban on Hollywood films in China, both Texas Capital and Benchmark analysts retained their positive outlooks, noting the absence of official announcements from Chinese authorities. Texas Capital suggested that IMAX might be less affected by such measures due to its capability to showcase local language content. Furthermore, IMAX and TOHO Cinemas have expanded their partnership in Japan, planning six new IMAX with Laser systems, which will enhance their presence in the region.

This agreement includes an upgrade to an existing theater, marking a significant step in IMAX’s growth strategy in Japan. The expansion reflects IMAX’s commitment to innovation and its strategic partnerships, which are crucial for its continued success in the global market. These developments underscore IMAX’s ongoing efforts to strengthen its position in the entertainment technology sector.

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