Leading global entertainment technology company
) has signed an agreement with Europe's Nordic Cinema Group to
install an IMAX theatre at Nordic's SF Bio multiplex. This IMAX
theatre will open its doors in the fall of next year.
Nordic Cinema Group - one of the major cinema operators in
Europe with 590 screens - is keen to capitalize on the increased
popularity of IMAX. It foresees the introduction of IMAX in the
Scandinavian mall as a strong earning opportunity.
We believe this agreement will help the two companies to expand
their respective businesses. It should prove particularly crucial
for IMAX which reported dismal financial numbers in the recently
concluded quarter. The bottom line fell below the Zack Consensus
Estimate. Quarterly total revenue was $48.2 million, down 3% year
over year, also short of the Zacks Consensus Estimate of $50
However, in the quarter, IMAX generated strong theater signing,
which resulted in record-high theater backlog. Recently, the
company entered into a multi-picture agreement with Disney and
received strategic investments in its Chinese venture. We believe
these two developments will significantly benefit the company in
the long term.
Earlier, IMAX's business model was focused solely on theater
technologies and equipment. However, the company gradually adopted
Hollywood box-office selling as its integral business wing.
Management is focusing on three factors, namely scalability,
product differentiation and penetration. Scalability aims at
controlling operating costs to improve margin. Product
differentiation involves significant progress in laser projection
technology which differentiates the company's brand name and film
presentation. Penetration involves signing of agreements to develop
local language films outside the U.S.
Other Stocks to Consider
IMAX currently carries a Zacks Rank Rank #3 (Hold).
Better-ranked stocks in the entertainment industry include
Lions Gate Entertainment Corp.
The Walt Disney Co.
). While Lions Gate currently has a Zacks Rank #1 (Strong Buy),
News Corp. and Walt Disney carry a Zacks Rank #2 (Buy).
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