Piper Jaffray Upgrades Imax: 'China Volatility Presents Opportunity'

In a report published Monday, Piper Jaffray analyst James M. Marsh upgraded the rating on

from Neutral to Overweight, while raising the price target from $33 to $41. IMAX shares have dipped more than $7 from the recent highs of above $43, with the pressure being caused by volatility in the China market. Analyst James Marsh pointed out that the IPO of IMAX China shares remained largely on track, although taking "a little longer and priced at a lower multiple," and could add to the IMAX price target. Marsh expects "domestic and international box office outperformance" and raised the IMAX box office expectations from $928M to $963M, following "our bottoms up review of the release slate." In the report Piper Jaffray noted, "IMAX continues to grow its box office share driven by growth in its global network, brand awareness and solid content offering. The outperformance in Q2 was largely driven by strong global box from Jurassic World that has generated over $1B in Q2." The number of films being distributed by IMAX across its digital network is up 54 percent over the past three years and continues to grow. Marsh believes that is 12 percent upside to the new price target and considers the 16 percent decline in the company's shares as "an attractive entry point" since the fundamentals "remain solid."