NEW YORK ( TheStreet) -- Cinemark ( CNK) shares are gaining more than 2.5% today after the movie theater company and Imax ( IMAX) announced they have resolved their litigation claims against each other. In addition, Cinemark will acquire two new digital Imax theater systems and upgrade all six of its Imax locations to digital theaters.

"Our Imax theaters have always been strong performers," Cinemark CEO Alan Stock said. "By adding two new locations in California and Texas, and by upgrading to digital, we believe our Imax stable of theaters will become even more productive, more profitable and will showcase the biggest and best blockbuster titles that Imax has to offer."

The new theaters and upgrades are expected to be completed by April 2011.

In 2009, Imax and Cinemark launched lawsuits against each other over Imax's XD digital theaters as well as various business practice disputes. Terms of the recent settlement were not disclosed.

"All claims and counterclaims in the patent litigation in Texas and contract litigation in New York are being dismissed with prejudice," Imax said today in a statement.

Cinemark shares are up about 2.5% to above $17.75 today after analyst James Marsh of Piper Jaffray maintained his overweight rating and $22 price target on the stock. He also maintained his overweight rating for Imax shares, with a $30 price target.

"We see the settlement of Imax and Cinemark lawsuits as win-win," Marsh said in his Jan. 4 research note. Through the new deal, Imax has been granted the opportunity to expand its footprint while Cinemark adds to its XD brand with higher grossing screens.

Analyst Matthew Coppola of Williams Capital Research initiated coverage of Cinemark with an outperform recommendation and a 12-month target price of $21 based on his 2011 earnings estimate of $1.47 a share.

In a Jan. 4 research note to investors, Coppola says he expects Cinemark, which is the second largest exhibition operator in the world, to see "explosive international growth" as it introduced the multiplex theater to Latin America.

Cinemark currently operates theaters in 13 of the 15 major metropolitan areas in Latin America and its international theaters have seen a growth rate of 13.6% over the past 3 years.

Coppola noted that the company's acquisition activity since 2009 has been stagnant as it focuses on expanding organically. In 2010 the company built 2 theaters domestically and 5 theaters internationally. It expects to add 17 new theaters with 170 screens by the end of 2011.

In November 2010, analyst James Goss of Barrington Research reaffirmed his outperform rating on Cinemark after the company released better-than-expected 2010 third-quarter earnings of 29 cents per share, topping the consensus of 27 cents a share.

His price target for 2011 is $23 based on its successful foreign exposure as well as its digital and 3D initiatives.

-- Written by Theresa McCabe in Boston.

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