Wedbush Previews IMAX's Q2 Results

Wedbush’s Michael Pachter expects IMAX Corporation (USA) IMAX to report its Q2 results in line with the estimates, believing the company is well positioned to grow its revenues and earnings over the next few quarters.

Pachter reiterated an Outperform rating on the company, with a price target of $40.

Well Positioned

The analyst mentioned that IMAX was well positioned to grow its revenues and earnings, driven by its efforts at expanding its footprint throughout Europe, the Middle East and Japan, and obtaining exclusive windows for several films that could help the company capture “a disproportionately large percentage of box office revenues.”

Pachter also pointed out that expanding the rollout of the new laser projectors, increase in the film slate, especially internationally, and expanding new content offering, which could include virtual reality and TV pilots, were also likely to drive IMAX’s revenue and earnings.

Related Link: Wedbush Offers Q2 Update On Theater Stocks: Favors IMAX, AMC, Regal

Q2 Preview

Pachter expects the company to report its Q2 revenue at $93 million, with adjusted EBITDA of $27 million and EPS of $0.18, with the revenue beating the consensus but the adjusted EBITDA and EPS missing the consensus expectations.

“We assume 32 installations and 2 upgrades during the quarter, and worldwide IMAX box office of $260 million resulting in total DMR revenue of $28 million,” the analyst stated.

The FY16 revenues, adjusted EBITDA and EPS estimates have been lowered to reflect lower DMR revenue in Q2, as well as lower gross margins for FY16.

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