Imax shares tumble 13% on analyst’s downgraded outlook
Imax Corp.’s stock price plummeted 13% on Monday 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. Imax shares fell $3.65 to $24.94.
“We believe that estimates for Imax for [the second half of 2011] are too optimistic given that the [fourth quarter] slate has three kids’ films, a genre which this year has seen considerably lower 3-D share this year compared to last,” Mogil wrote.
Many Imax movies play in 3-D, a technology that has been dropping in popularity among domestic movie audiences.
Added Merriman’s Eric Wold: “We 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 shares. Since its high June 2 of $37.26, Imax’s stock price has dropped 33%.
In response to the analysts, Imax Chief Executive Richard Gelfond said, “We have a diversified slate based on blockbuster films in 2-D and 3-D, for families and fanboys. We think it’s way too premature to predict how the slate will perform for the year.”
