'Jurassic World' Sets Records...How Can Investors Play It?
In a report published Monday, B. Riley analysts said that the strong global opening for Jurassic World highlighted demand for the premium formats offered by IMAX Corporation (USA) (NYSE: IMAX) and RealD (NYSE: RLD).
"The opening weekend for Jurassic World helped reverse recent box office doldrums with a near record-setting estimated domestic total of $204.6MM (with $511.8MM globally)." Total box office surged 43 percent over the year-ago weekend, pushing the QTD box office increase to 4.6 percent from the 1.2 percent increase last Sunday.
In the report B. Riley noted, "Even though we expect the box office strength of Jurassic World should continue over the next couple of weeks, we remain comfortable with our lower-than-consensus estimates for Q2 given the quarter's remaining film slate and the Y/Y comparisons – as we project the box office for the rest of the quarter would still need to increase by more than 30% in order to reach the projections reflected by consensus estimates."
The analysts added, "…while we expected the IMAX and RLD premium formats to outperform during the summer box office, the results for each around Jurassic World came in ahead of our projections."
Numerous performances were sold out, which helped IMAX generate $20.6MM in opening weekend domestic box office, setting a new record above the $19.0MM generated with The Dark Knight Rises in 2012. Globally, IMAX recorded an whopping $44.1MM in opening weekend box office. Moreover, RLD screens accounted for a record-setting $71MM of that box office, representing a market share, excluding IMAX, of about 91 percent.
"Given improving global consumer demand for both of the IMAX and RLD formats combined with their attractive high-margin contribution operating models, we continue to project EBITDA growth rates in the coming years well above those of the pure play exhibitors. Coupled with our expectations for positive near-term catalysts around each, we recommend continuing to add to positions in both companies even with the shares trading near 52-week highs (and all-time highs in the case of IMAX)," the analysts wrote.
B. Riley has a Buy rating on IMAX, with a price target of $50, while RLD was added to the Focus List on June 1.
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|Jul 2016||Roth Capital||Assumes||Buy|
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