We all knew that theater stocks would be a bloodbath in 2020, and IMAX (NYSE:IMAX) proved little different. However, with recovery from the pandemic now on the horizon, and the likelihood of the movies getting back to normal, there are positive signs ahead. Again, IMAX is likely to prove little different here either.
A Beat Here, a Miss There
The latest picture was a good news / bad news setup for IMAX of the kind most know pretty well. Earnings came out as a bit of a loss, and a rather narrow one at that, coming in at a loss of $0.21 per share against the Zacks estimate of a $0.20 per share loss. Neither case is particularly bright, but losing more than expected never turns out well. Worse yet, the fourth quarter of 2019 produced earnings of $0.35 per share, so the loss is nearly double as a result. However, given that the third quarter produced a loss of $0.75 per share, against expected losses of $0.31, it's clear that improvement is in progress.
Revenue, however, came out a little better than expected. The company posted $55.99 million in fourth-quarter revenue, which beat Zacks estimates by 13.51%, reports note. This still pales in comparison to fourth quarter 2019 revenue, however, which came in at $124.28 million.
The company cited improving performance in its Asian markets, which came back from the coronavirus a little faster since they got it first, as well as likely improvements to come this year as people start going back to the movies and want that full IMAX experience to go with their tickets. It will likely also help to have movies releasing again in quantities more approaching normal.
Resurging Sentiment
The analyst pool's take on IMAX, meanwhile—as based on our latest research—has been a bit of a roller-coaster ride, with a huge dip followed by a note of recovery. The company held a “buy” rating until about a month ago, but has been recovering in days since.
Six months ago, the company had two “hold” ratings and six “buy” ratings to its credit, a ratio that held into three months ago as well. A month ago, however, the bottom dropped out and the company had one “sell” rating, three “hold” and four “buy.” Today, the picture is slightly better, with one “sell”, three “hold” and five “buy.”
The price target, meanwhile, took a dip a while back but came roaring back to gains in every period since. Six months ago, it stood at $16.31 per share. That dropped to $15.94 three months ago, but a month ago, it bounced back to $18.30. Today, it's sitting at $21.04, and since shares are currently trading at $23.56, it's clear there's some downside risk potentially at play here. Indeed, there have been six analyst changes stepping in this year so far, and everyone has boosted its price target. Some more so than others, but aside from Goldman Sachs' rather conservative $17.90 price target, everyone else changed to $22 per share or higher.
Back to the Movies
There's no doubt that people are starved for movies. The release roster this year was slim at best; when one of the biggest movies pre-pandemic was “Sonic the Hedgehog” and one of the biggest post-pandemic was “The War With Grandpa”, you know it's a thin year. And it's even worse for IMAX; IMAX screens depend on big-budget blockbusters with plenty of fast movement and explosions in order to provide the fullest effect. Even then it doesn't always work; I remember seeing “Geostorm” on an IMAX screen and the effect was comparatively minimal.
However, a look at release schedules for 2021 suggests there could be recovery on the way. With at least two Marvel Cinematic Universe (depending on how you count them) movies set to come out this year, along with a host of others—this month alone is set to yield a Disney movie, a sci-fi action title and, of course, “Godzilla Vs. Kong”—that should be the shot in the arm that theaters so desperately need after a mostly-dry year. We knew back in 2020 that 2021 was likely to be a very crowded year, cinematically-speaking, because several titles that were done and ready for 2020 releases were pushed back until “when the theaters are open.”
Throw in a comparative lack of competition—the shutdown of Family Video stores make movie rentals a much more difficult process than previously seen—and a growing move toward shortening the window to streaming and IMAX looks like it could be ready for its own comeback. Customer safety concerns will also likely play a part, but for the legions of entertainment-starved cabin fever cases out there, they're more than ready to pay for a ticket once more.
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