Shares of entertainment technology specialist IMAX (IMAX 3.88%) jumped as much as 9.8% higher on Tuesday. The company reported strong results for the Chinese New Year holiday over the weekend, followed by a couple of bullish analyst notes.
IMAX screenings grossed a record-breaking $25 million over the Chinese New Year weekend. That's a 45% increase over the previous record, which was set two years ago. Theaters were closed during this important holiday in 2020 due to the COVID-19 pandemic. This year's solid result was achieved despite coronavirus safety restrictions that limit Chinese movie theaters to filling no more than 75% of their installed seats.
Benchmark analyst Mike Hickey reiterated his buy rating on IMAX shares, raising his price target to $22 per share. Macquarie analyst Chad Beynon underscored his outperform rating on the stock with a price target of $24 per share. The analysts argue that IMAX is a solid performer as long as movie theaters are open to the public and safe to attend. The company also has a significant backlog of theater installations to work through and a premium brand. Beynon sees IMAX as the best investment in physical movie theaters right now.
Movie theater chains are difficult to love nowadays but IMAX may be the only exception to that rule. The company's record-breaking results in the important Chinese market are paired with a reasonably solid balance sheet, where the long-term debt load is roughly equal to IMAX's cash balance. AMC Entertainment Holdings and Cinemark can't lean on Chinese demand and they are drowning under multi-billion-dollar piles of debt. And, as this week's bullish analysts noted, the larger-than-life IMAX experience holds more value than the standard theater-going model, which is easier to replace with a bucket of popcorn on your own couch.
I'm not exactly champing at the bit to pick up IMAX shares today, but it's the only theater-chain stock that is worthy of serious consideration. It's no surprise to see the stock surging on an impressive showing in the Chinese market.