Imax stock plummets on box-office concerns
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Imax Corp. stock plummeted more than 11% after an analyst raised concerns that the company’s digital and large-format screens don’t have as much box-office mojo as previously believed.
Stifel Nicolaus analyst Ben Mogil downgraded box-office projections for the second half of the year and lowered his target for the company’s stock price to $27, from $32. His report came a week after similar predictions were made by Merriman Capital. The stock was trading at $25.33 late Monday.
‘We believe that estimates for IMAX for [second half 2011] are too optimistic given that the [fourth quarter 2011] slate has three kids’ films, a genre which this year has seen considerably lower 3D share this year compared to last,’ Mogil wrote.
Most, but not all, Imax movies play in 3-D, a technology that has been dropping in popularity among domestic movie audiences.
Added Merriman’s Eric Wold: ‘[W]e are seeing a consistent pattern with our and consensus IMAX box office assumptions proving to be too aggressive -- which has led to three consecutive quarters of lower-than-expected results.’
The stock drop comes as Imax has been boasting about its returns from ‘Harry Potter and the Deathly Hallows -- Part 2.’ Imax screens have accounted for $41.6 million of that film’s $834 million worldwide gross, the highest of any ‘Potter’ film.
Summer has not been kind to Imax stock. Even before Monday’s downgrade, the stock has dropped significantly more than 20% from a high of $37.26 on June 2.
[Updated, 1:40 p.m., July 25: Reached for comment, Imax Chief Executive Richard Gelfond said, ‘We have a diversified slate based on blockbuster films in 2D and 3D, for families and fanboys. We think it’s way too premature to predict how the slate will perform for the year.’]
-- Ben Fritz