Is Imax Losing Its Edge In A Changing Movie Industry? Piper Jaffray Downgrades On Multiple Stock Pressures

While Imax Corp (USA) IMAX may have had some differentiating advantages that gave it a competitive edge in a changing movie business, this may no longer be the case, according to Piper Jaffray. 

The Analyst

Piper Jaffray's Stan Meyers downgraded Imax's stock rating from Overweight to Neutral with a price target slashed from $28 to $21.

The Thesis

Imax faces pressure on six different fronts that drove Piper Jaffray's downgrade, Meyers said in a research report. (See the analyst's track record here.) 

They are: 

• Expectations for "major estimate revisions" for Imax's fourth quarter to the downside.
• The ongoing loss of casual fans of Imax's offerings.
• Continued declines in per-screen averages in China.
• A lack of new initiatives like virtual reality.
• The absence of an upgrade option on MoviePass for Imax.
• Expectations for a meaningful deceleration in the top line.

Looking forward to the full year 2018, Meyers said he sees "limited" box office growth despite a film slate loaded with Imax-friendly films. The company is now expected to earn 88 cents per share in fiscal 2018 on revenue of $360.1 million versus the analyst's prior estimate of $1.18 per share on revenue of $400.7 million. The Street's estimate stands at 95 cents per share on revenue of $404.6 million.

Price Action

Shares of Imax were trading flat at $20.45 late in Wednesday's trading session. 

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