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Hawk’s Nest

Call Buyers See Movie Business Strengtheing

by | Oct 20, 2024

Imax (IMAX) last week with an unusual buy of 2500 March $21 calls for $625K while 5000 December $18 and $21 call purchases still remain in open interest. IMAX shares are starting to work out of a weekly bull flag and $26.50 an upside measured move target.

IMAX has a $1.1B market cap and now trades 17.5X Earnings, 3.1X Sales, 9.8X EBITDA and 23.25X FCF with revenue/EPS growth seen accelerating in 2025 to 7.37% and 15.65% respectively. Short interest is elevated at 9.2% of the float. IMAX spoke at a BAML Media Conference in early September explain 2/3 of its revenues are outside North America and it sees itself more as a technology platform, licensing technology to about 1,800 theaters in 90 countries around the world. IMAX has no leases, no debt and is an asset-light model. IMAX’s market share has moved strongly higher since the pandemic and sees a positive fundamental shift in the movie business. It looks out to 2026 with Avengers, Dune and Star Wars as key events.

IMAX will next report on 10/30 and I expect a strong forward outlook as business trends are strongly positive. IMAX shares are coiled under AVWAP off its record highs from 2015 and the upside potential looks great at this valuation.