IMAX's Growth Prospects Hindered by Streaming Challenges

On Dec 27, 2016, we issued an updated report on IMAX Corp. IMAX .

The company's third-quarter 2016 earnings had surpassed the Zacks Consensus Estimate by a penny. However, earnings declined significantly on a year-over-year basis. The slump in bottom-line performance can be attributed to lower revenues due to lack of box office hits. IMAX has been struggling to boost its top line, since a number of movies released in the past few months have underperformed.

However, the latest Star Wars movie - Rouge One - is anticipated to provide the much needed respite for the company. Per reports, this movie has been doing good business, which can also be attributed to its release during the holiday season.


A major concern for movie theatre companies is the speculation that filmmakers might opt for making their content available online, at a premium, within almost two weeks of its release. If implemented, this change can significantly impact the revenue of companies like IMAX. Online video streaming and piracy have become huge concerns for the movie industry. Several movie houses have reported that revenues have been affected adversely due to lack of effective measures against piracy and the easy availability of content online.

Moves like making content available online within a short time span of a movies' release is believed to pose a threat to companies like IMAX, AMC Holdings Inc. AMC , Regal Entertainment Group RGC , and The Marcus Corp. MCS . IMAX has however outperformed the broader Zacks rank Movie/TV Production/Distribution industry over the past three months. The company gained 7.31%, while the industry gained only 5.43% over the same period.

However, IMAX continues to make efforts to expand across the globe, with new partnerships and deals. Some of the new agreements of the company include those with Shanghai Film Corporation and SFC-Bailian Cinema Management Co., Ltd. (SFC-Bailian), Les Cinemas Gaumont Pathe and Wanda Cinema Line Corp. The company is likely to benefit from these deals in the future.

Zacks Rank

IMAX carries a Zacks Rank #4 (Sell).

You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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