Will IMAX (IMAX) Stock Benefit From This Analyst Upgrade?

NEW YORK (TheStreet) -- IMAX (IMAX) shares were upgraded to "buy" from "hold" by analysts at Stifel (SF) on Monday, who set a $32 price target on the company's shares.

The firm expects the entertainment technology company's EBITDA per screen growth to increase due to improved margins in its revenue sharing agreement.

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Separately, TheStreet Ratings team rates IMAX CORP as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate IMAX CORP (IMAX) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • IMAX has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign.
  • Net operating cash flow has significantly increased by 1508.89% to $13.93 million when compared to the same quarter last year. In addition, IMAX CORP has also vastly surpassed the industry average cash flow growth rate of 6.62%.
  • The gross profit margin for IMAX CORP is rather high; currently it is at 64.11%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, IMAX's net profit margin of 1.20% significantly trails the industry average.
  • IMAX CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, IMAX CORP increased its bottom line by earning $0.63 versus $0.61 in the prior year.
  • IMAX, with its decline in revenue, underperformed when compared the industry average of 14.7%. Since the same quarter one year prior, revenues slightly dropped by 3.0%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • You can view the full analysis from the report here: IMAX Ratings Report
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