U.S.-listed shares of IMAX Corp. (IMAX) traded up nearly 7% Wednesday after Goldman Sachs analysts increased their rating for IMAX's Honk Kong-listed shares to "buy" from "neutral."
The "worst has passed" for IMAX China, Goldman analysts said in a Wednesday note, citing an upcoming industry-wide recovery as reasoning for newfound optimism. IMAX China's high operating leverage will give it a boost in all box office rebounds.
IMAX China has improved programming strategies by adding more Chinese language films, analysts wrote. The company has also increased its agility, allowing it to "better capture blockbusters." Average ticket prices for IMAX films look to have reached their bottom, suggesting IMAX China's return on equity is on track for stabilization.
Given their fine tuning of estimates through 2021 and reassessment of difficult-to-forecast industry growth, analysts cut their price target for IMAX China to HK$24.20 from HK$26.63. The new target price still leaves IMAX China "among the highest upsides" in the analysts' coverage.
Hong Kong-listed shares finished Wednesday trading up 13.2% to HK$23.55. U.S.-listed shares traded up nearly 4% to $22.85 in morning trading Wednesday.
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