Could Apple, Amazon, Or Netflix Buy IMAX? This Analyst Sees Rising M&A Appeal For The Company

• Hickey mentioned potential suitors such as Apple, Amazon, Netflix, Disney, Sony, and Comcast’s NBCUniversal as streaming and theatrical ecosystems continue to converge.
• The Wall Street Journal report stated that the company’s hunt for a buyer comes as premium theatrical experiences have been growing faster than the overall box office.
• Premium formats, led by IMAX, grabbed 16% of U.S. and Canadian ticket sales through early April, the report added.

Shares of IMAX Corp (IMAX) climbed over 13% premarket on Friday after a report of a potential sale prompted stock repricing by a Benchmark analyst.

This comes after The Wall Street Journal reported on Thursday that the company has explored a potential sale and approached entertainment giants. It added that the company’s hunt for a buyer comes as premium theatrical experiences have been growing faster than the overall box office.

Mike Hickey, analyst at Benchmark, raised Imax's price target to $60 from $44 and kept a ‘Buy’ rating, stating that the company’s strategic value could make it an attractive acquisition target for media and tech heavyweights such as Apple (AAPL), Amazon (AMZN), and Netflix (NFLX), according to TheFly. 

Strategic Value Of IMAX Not Fully Realized

The analyst stated that the report validates a long-running thesis that IMAX’s strategic value is not fully reflected in its public market valuation, especially given its premium global cinema footprint and brand equity. 

What separates IMAX from other viewing experiences is its technical requirements for projectors, screens, and sound setups, which ultimately give it leverage over both exhibitors and studios.

Premium Theatre Format In The Spotlight

The WSJ report also stated that premium large-format theatres have been growing faster than the broader box office market. Premium formats led by IMAX  grabbed 16% of U.S. and Canadian ticket sales through early April, up from 13% in the same stretch of 2021, per data firm EntTelligence.

IMAX alone, the most recognized name in the space, took 5.2% of domestic box office revenue last year versus just 3.2% in 2019, riding the success of event films like "Avatar: Fire and Ash" and "Project Hail Mary" that were built for its screens and sold as must-see spectacles.

How Gelfond Transformed IMAX

Richard Gelfond, who took the reins as CEO in April 2009 after serving as co-CEO since 1996, has spent years transforming IMAX from a specialty documentary format into the premium blockbuster exhibition.

Under his watch, the company pivoted from museum screens and nature films — where it was "confined to museums and to showing short documentaries" — to becoming the must-have format for Hollywood's biggest production houses.

IMAX’s Positioning As A Premium Theatrical Experience Company

IMAX has increasingly positioned itself as a premium theatrical-experience company at a time when studios are leaning more heavily than ever on event films to drive box-office performance. 

As streaming squeezes mid-budget titles out of theaters, the big-budget spectacles such as the "Avatar" sequels, the "Dune" franchise, the Marvel events, and Christopher Nolan’s creations are being marketed as must-sees on the biggest, most immersive screens available. IMAX's proprietary projection and sound setups have made it the default destination for those releases.

What Retail Thinks Of IMAX

On Stocktwits, retail sentiment for IMAX has improved to ‘extremely bullish’ from ‘bullish’ while message volumes increased to ‘high’ from ‘low’ over the past 24 hours.

Shares of IMAX have dropped over 5% so far this year.

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