Last Update 22 Jan 26

Fair value Increased 13%

IMAX: Future Slate And Profit Execution Will Support Measured Upside Potential

Analysts have lifted their IMAX fair value estimate from about US$38.81 to roughly US$43.73 per share, citing updated assumptions for revenue growth, profit margins and a lower future P/E that together support a higher price target.

Analyst Commentary

Analysts reviewing IMAX after the updated fair value estimate are split between what could support the higher valuation and what might limit upside if execution falls short.

Bullish Takeaways

Bullish analysts see the revised fair value of about US$43.73 as reflecting updated assumptions around revenue and margins that, in their view, better align with the company’s current operating profile.
They point to the use of a lower future P/E in the model as a sign that expectations have been tempered. They argue this helps reduce the risk of overpaying for growth while still supporting a higher fair value.
Supporters of the higher estimate highlight that the new assumptions explicitly tie valuation to execution on profitability, rather than relying only on top line expansion.
Some bullish analysts also view the refreshed framework as a cleaner reference point for comparing IMAX to entertainment peers that are priced on similar earnings multiples.

Bearish Takeaways

Bearish analysts caution that fair value targets built on revenue and margin assumptions can be sensitive to any slowdown in project pipelines or content performance, which could pressure earnings and compress the implied valuation.
They argue that even with a lower future P/E, the uplift from roughly US$38.81 to about US$43.73 may leave limited room for error if operating costs are higher than expected or if monetization initiatives take longer to gain traction.
Some cautious views focus on execution risk. They note that any delay in meeting the assumed profitability profile could make the new fair value appear aggressive rather than conservative.
Bearish analysts also flag that reliance on a single earnings multiple can understate risks tied to shifts in investor sentiment or sector-specific headwinds that are not fully captured in the current model.

What's in the News

Breggz partnered with IMAX and DTS on Zohn-1, the first wireless in-ear earphones with IMAX Enhanced certification. This adds in-ear hearables to the IMAX Enhanced device program alongside TVs, laptops, tablets, phones, AVRs, loudspeakers and soundbars (Client Announcement).
IMAX China subsidiaries and IMAX Corporation agreed to amend existing services agreements from December 1, 2025. The amendments expand the scope to include IMAX Enhanced and other new businesses and revise fees, with revised annual caps for 2025 and 2026 increased to HK$20.8 million each year (Client Announcement).
GKIDS and IMAX announced an expanded partnership to bring additional 4K Studio Ghibli restorations to North American theaters from 2026 onward, following the IMAX release of "Princess Mononoke." Future titles will be created from new 4K restorations overseen by Studio Ghibli’s Atsushi Okui (Strategic Alliance).
IMAX Corporation and Cinemark Holdings signed an agreement covering 17 locations in the U.S. and South America to add and upgrade IMAX with Laser systems and to activate three IMAX 70mm film projectors. All three new 70mm locations are planned to be operational before the July 17, 2026 release of Christopher Nolan’s "The Odyssey" (Client Announcement).
Several banks, including Wells Fargo Securities, BMO Capital Markets, BofA Securities and JPMorgan Chase, were added as co lead underwriters for IMAX Corporation’s US$220 million fixed income offering (Public Offering Lead Underwriter Change).

Valuation Changes

The fair value estimate has risen from about US$38.81 to roughly US$43.73 per share.
The discount rate has edged down from around 8.81% to about 8.71%.
The revenue growth assumption has moved from roughly 6.92% to about 9.52%.
The net profit margin assumption has shifted from around 15.38% to about 22.39%.
The future P/E multiple has been reduced from about 39.43x to roughly 28.32x.

Expanding global footprint, premium content partnerships, and diversified offerings are fueling growth, increased bargaining power, and improved margins in key established and emerging markets.
Cost discipline and capital-light models are boosting sustained margin expansion, recurring cash flows, and flexibility for reinvestment or shareholder returns.
Shifting consumer preferences, industry competition, content volatility, and high capital needs pose significant risks to IMAX's growth, margins, and differentiated market position.

Catalysts

About IMAX

Operates as a technology platform for entertainment and events in the United States, Greater China, rest of Asia, Western Europe, Canada, Latin America, and internationally.What are the underlying business or industry changes driving this perspective?

Rapid acceleration of new system installations and a replenishing, geographically diverse backlog-driven by consumer demand for premium, differentiated out-of-home entertainment-positions IMAX for continued growth in both top-line revenue and recurring cash flows as its global footprint expands, especially in high-per-screen-average markets like North America, Japan, and Australia.
Intensifying preference among studios and filmmakers to create films optimized for IMAX technology (e.g., film for IMAX releases), reinforced by record-high box office indexing (15–22% of opening weekends on major tentpoles), is increasing IMAX's bargaining power and market share, driving incremental revenue and enhanced adjusted EBITDA margins.
Strategic expansion into emerging and underpenetrated markets (notably China, India, Japan, and France), supported by rising urbanization and growing middle-class entertainment spending, is expected to deliver above-market growth rates and network scale benefits, thereby sustaining multi-year revenue momentum.
Diversification of content offerings-including local-language blockbusters, alternative content (concerts, live events), and deeper relationships with streaming and tech partners like Apple, Amazon, and Netflix-is broadening IMAX's audience base and improving margin mix, contributing to higher contribution per screen and more resilient earnings.
Operating leverage from cost discipline, capital-light joint-venture models, and advances in proprietary projection/distribution technology (e.g., streaming for live events) is driving sustained margin expansion and cash generation, directly benefiting net margins and enabling opportunistic reinvestment or shareholder returns.

IMAX Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming IMAX's revenue will grow by 8.7% annually over the next 3 years.
Analysts assume that profit margins will increase from 9.0% today to 15.9% in 3 years time.
Analysts expect earnings to reach $74.0 million (and earnings per share of $1.1) by about September 2028, up from $32.8 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 32.7x on those 2028 earnings, down from 50.3x today. This future PE is lower than the current PE for the US Entertainment industry at 39.3x.
Analysts expect the number of shares outstanding to grow by 2.09% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.92%, as per the Simply Wall St company report.

IMAX Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Growing consumer preference for at-home entertainment (streaming, VR, gaming) and demographic shifts, especially among younger generations less engaged with traditional cinema, present secular headwinds that could reduce long-term theater attendance and constrain future IMAX box office revenue and install growth.
The company's continued heavy reliance on blockbuster releases and film for IMAX titles exposes it to volatility in the Hollywood content pipeline-any disruption in studio output, shortened theatrical windows, or a decline in tentpole performance could lead to unpredictable revenue and earnings, undermining stability.
Ongoing investments in technology upgrades, new screen installations, and retrofits across global markets require high capital outlays; if the current pace of revenue growth does not persist, or installation rates plateau, these expenditures could compress net margins and dampen long-term profitability.
Technological competition from alternative premium large format (PLF) providers (such as Dolby Cinema, as well as exhibitors' own PLF screens) threatens IMAX's market share and pricing power; increasing industry consolidation among theater chains could also reduce IMAX's bargaining leverage, impacting recurring royalties and install revenue.
Continued dependence on location-specific, event-driven experiences may face headwinds as consumers increasingly value convenience and digital access; this could erode IMAX's differentiated value proposition, negatively affecting new installations, per-screen revenues, and ultimately, earnings growth.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $32.818 for IMAX based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $38.0, and the most bearish reporting a price target of just $18.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $466.0 million, earnings will come to $74.0 million, and it would be trading on a PE ratio of 32.7x, assuming you use a discount rate of 8.9%.
Given the current share price of $30.68, the analyst price target of $32.82 is 6.5% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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