Market Overview

This Analyst Says Sony Should 'Think About' Acquiring IMAX

Share:
This Analyst Says Sony Should 'Think About' Acquiring IMAX

Sony Corp (NYSE: SNE) announced last week its own branded premium large-format theatrical system with the first screen location set to open April 1-4 during CinemaCon in Las Vegas. Instead of investing in its own new theater business, the company may be better off acquiring IMAX Corp (NYSE: IMAX), according to MKM Partners.

The Analyst

MKM's Eric Handler maintains a Buy rating on IMAX with an unchanged $27 price target.

The Thesis

Handler said in a note that Sony is "a bit late to the market" with the announcement of its own PLF movie auditorium and offers nothing unique or differentiated compared to the multiple competitors, including IMAX. In fact, each system comes with a "relatively steep cost" of more than $1 million so Sony will face an uphill battle in catching up against its peers.

Sony may be better off buying IMAX, which Handler said accounts for a 40 percent market share of all PLF screens at 40 percent. IMAX's technology, unlike Sony, offers a differentiated experience with its proprietary DMR film process and a unique aspect ratio which make the picture look more square than traditional rectangular theater screens.

Meanwhile, Handler said IMAX isn't getting enough credit from investors as the company offers an attractive, multi-revenue stream with high margins. The underappreciated company could realize greater shareholder value through a sale of itself with a price tag of up to $32 per share, which implies a multiple of 14 times 2019 adjusted EBITDA.

Price Action

Shares of IMAX were trading higher by 3.1 percent at $21.58 Wednesday afternoon.

Related Links:

Mid-Morning Market Update: Markets Mostly Flat; CVS Health Issues Weak Earnings Outlook

Fed In Focus As Investors Await Release Of Minutes From "Policy Shift" Meeting

Latest Ratings for IMAX

DateFirmActionFromTo
Feb 2019Canaccord GenuityDowngradesBuyHold
Oct 2018Canaccord GenuityMaintainsBuyBuy
May 2018B. Riley FBRMaintainsBuyBuy

View More Analyst Ratings for IMAX
View the Latest Analyst Ratings

Posted-In: Eric Handler MKM Partners moviesAnalyst Color Analyst Ratings Best of Benzinga

 

Related Articles (IMAX + SNE)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
YETIJefferiesMaintains40.0
DRIBank of AmericaReiterates130.0
PVACNorthland SecuritiesUpgrades0.0
NKEWells FargoMaintains80.0
DRIWells FargoMaintains120.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Trader Essentials
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

Chemical Bank Wins Naming Rights To Detroit's Cobo Center

KeyBanc Believes Welbilt 2019 Guidance May Prove Conservative