IMAX ( NYSE: IMAX ) is likely to keep benefiting from the strength of Walt Disney's ( NYSE: DIS ) Avatar: The Way of Water movie, investment firm MKM Partners said on Thursday.
Analyst Eric Handler, who has a buy rating and a $21 price target on IMAX ( IMAX ), noted that the movie is already a "big success," having generated more than $500M at the global box office.
And with expectations that the film will have "long legs" over the next several weeks, it should benefit IMAX ( IMAX ) as movie goers will be more apt to see the James Cameron-directed film on premium screens.
"Management noted pre-sales beyond opening weekend were strong (some even three weeks out) and the movie should have legs well into January, Handler wrote in a note to clients after meeting IMAX's ( IMAX ) management.
He added that the average revenue per screen were above $40,000 in North America and international markets, excluding China, while IMAX's market share was seen as "excellent," with roughly 28% of screens in China, even accounting for the long 3 hour-run time of the movie.
"With a number of people waiting to see Avatar in IMAX, the company's market share should steadily improve," Handler continued. "To that point, IMAX saw its domestic market share for Avatar rise to 14% on Monday from 12% for this past weekend. We remain comfortable Avatar will generate at least, if not more, than the $95M we have estimated for [fourth-quarter]."
Looking into 2023, Handler noted that IMAX ( IMAX ) management is expecting a higher box office, along with increased signings and more installations, with the movie slate looking to have "greater" depth next year compared to this year and is more spread out.
IMAX ( IMAX ) may also benefit from a "more normalized" China box office in 2023 as the country scraps its zero-COVID policy and sees carry over from Avatar: The Way of Water and the new Chinese movie, Wandering Earth 2 .
Earlier this month, IMAX China ( OTCPK:IMXCF ) and IMAX ( IMAX ) named Daniel Manwaring as CEO of IMAX China, effective January 9, 2023 .
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IMAX to benefit from Avatar's 'big success' and 'long legs,' MKM says