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Why IMAX Stock Jumped 9.8% Today

By Anders Bylund - Feb 16, 2021 at 1:45PM

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The big-screen technology expert's performance in the Chinese New Year inspired a couple of bullish analyst notes.

What happened

Shares of entertainment technology specialist IMAX (IMAX -1.13%) 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.

So what

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.

Smiling teenagers with popcorn buckets in a movie theater.

I hope they're social distancing. Image source: Getty Images.

Now what

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.

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Stocks Mentioned

IMAX Corporation Stock Quote
IMAX Corporation
$15.76 (-1.13%) $0.18
Cinemark Holdings, Inc. Stock Quote
Cinemark Holdings, Inc.
$15.88 (-1.46%) $0.23
AMC Entertainment Holdings, Inc. Stock Quote
AMC Entertainment Holdings, Inc.
$11.90 (-8.98%) $-1.18

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