Caesars Entertainment misses Q2 earnings expectations, shares edge lower
On Thursday, Rosenblatt Securities increased the price target for IMAX Corporation (NYSE:IMAX) shares from $28.00 to $35.00, while maintaining a Buy rating on the stock. Currently trading at $27.22, IMAX shares have delivered an impressive 76.3% return over the past year and are trading near their 52-week high of $27.38. According to InvestingPro analysis, the stock appears to be trading above its Fair Value, with a current P/E ratio of 60.7x. The adjustment follows a robust beginning to the first quarter, marked by successful film releases.
IMAX had faced a tough fourth quarter, with two major Hollywood movies underperforming and a Chinese film lineup dominated by low-budget features that did not leverage the IMAX format effectively. However, the scenario has shifted significantly in the current quarter. The release of "Captain America: Brave New World" and the box office success during the Chinese New Year holiday, particularly with "Ne Zha 2," have contributed to a positive turnaround. The animated movie "Ne Zha 2" has grossed over $1.3 billion globally, including more than $100 million in IMAX theaters alone. This recovery is reflected in the company’s strong financial health, with InvestingPro data showing a solid current ratio of 3.78 and moderate debt levels.
The firm’s analysts are optimistic about IMAX’s prospects for the year, citing a record number of films specifically shot for the IMAX format, which is expected to result in higher-than-average performance. This lineup includes several local language films and provides a diverse content range that could significantly exceed both the company’s and Wall Street’s financial forecasts.
The new price target is based on a 13 times enterprise value to estimated calendar year 2025 earnings before interest, taxes, depreciation, and amortization (EV/CY25 EBITDA) ratio. This valuation remains below the mid-teens multiple at which IMAX shares have historically traded. The previous target was set at a 10 times multiple. The raised price target reflects confidence in the company’s ability to capitalize on its strong start to the year and deliver continued growth.
In other recent news, IMAX Corporation reported its fourth-quarter earnings for 2024, revealing an earnings per share of $0.27, which fell short of the anticipated $0.42. The company’s revenue also missed expectations, coming in at $92.7 million against a forecast of $118.33 million. Despite these misses, IMAX reported an 8% year-over-year growth in Q4 revenue and a 21% improvement in operating cash flows. Analysts noted the company’s strong 2025 outlook, with expectations of a robust slate of films and market expansion. IMAX anticipates installing 145-160 systems and projects an IMAX box office exceeding $1.2 billion for 2025. CEO Rich Gelfond emphasized the high demand for IMAX among studios, while CFO Natasha Fernandez expressed confidence in the company’s future growth, expanding margins, and increasing cash flows. The company’s strategic partnerships, including a significant deal with Netflix (NASDAQ:NFLX), highlight its expanding content portfolio and global network.
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