MW Imax offers buying opportunity as 2025 box office rebounds, says analyst

By James Rogers

A rebounding China box office will be key, says analyst firm Benchmark

Imax Corp. is poised to reap the benefits of a strong 2025 box office despite the "underwhelming" performance of some big-name movie releases at the end of last year, says analyst firm Benchmark.

"We have adjusted our 4Q estimates downward due to a softer-than-expected box office but view the resulting share-price weakness, reflecting the 4Q miss, as a buying opportunity," wrote Benchmark analyst Mike Hickey in a note released Monday.

The analyst firm lowered Imax's (IMAX) fourth-quarter revenue estimate to $95.92 million, from its prior estimate of $115.18 million. Benchmark cited the "disappointing release" of "Joker: Folie à Deux," continued weakness in China and the "underwhelming performance" of "Mufasa: The Lion King" at 2024's year-end. These factors, Benchmark said, failed to salvage the quarter or the year.

Related: IMAX's stock is up more than 70% this year. Here's why an analyst sees more room to run.

"Joker: Folie à Deux" had a muted opening in October. The movie is director Todd Phillips' sequel to his hugely successful "Joker," the first R-rated film to bring in $1 billion at the box office.

Walt Disney Co.'s $(DIS)$ "Mufasa: The Lion King" had a disappointing opening weekend last month. However, the prequel to "The Lion King" has brought in an estimated $539.7 million worldwide since its release on Dec. 20, according to Comscore.

Benchmark also lowered Imax's fourth-quarter Ebitda estimate to $32.02 million from $42.84 million.

Related: Cinemark's stock is dubbed a top pick amid 'compelling' slate of 2025 movies

Despite lowering its estimates, Benchmark maintained its buy rating and $30 price target for Imax. "We remain confident in the company's growth prospects," wrote Hickey. "Key to IMAX achieving its ambitions will be a rebounding IMAX China box office, where we are optimistic the Chinese New Year, beginning [Jan. 29], will kickstart the recovery, though the durability and magnitude of the rebound beyond the holiday remain uncertain."

Shares of the high-end movie-theater operator were down around 2% Monday. The stock has fallen nearly 12% in 2025, but is up almost 56% in the last 12 months.

China is positioned for "significant growth" in 2025, according to Benchmark. "The Chinese New Year slate features promising titles like 'Creation of the Gods II,' 'Nezha II,' 'Detective Chinatown,' and 'Legend of the Condor Heroes,' expected to drive strong box-office performance," wrote Hickey. "With blockbuster titles such as 'Mission: Impossible - Dead Reckoning Part Two,' 'Avatar 3,' 'Formula 1,' and 'Zootopia 2' on the horizon, 2025 prospects are further bolstered by IMAX China's strong ties to the film bureau, enabling Hollywood releases with minimal cuts."

Related: AMC and Cinemark rode 'incredible' Black Friday box office surge, research finds

Of 15 analysts surveyed by FactSet, five have an overweight or buy rating, nine have a hold rating and one has a sell rating for Imax.

-James Rogers

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January 13, 2025 12:35 ET (17:35 GMT)

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