Last Update 05 Feb 26

Fair value Increased 0.83%

IMAX: Future Slate And Execution Will Support Expanded Premium Format Opportunities

Analysts have inched their price target for IMAX higher to approximately US$44.09 from about US$43.73, reflecting updated assumptions around revenue growth, profit margins and future P/E levels.

Analyst Commentary

Analysts have updated their IMAX models around revenue, margins and future P/E levels, which feeds directly into the small lift in the price target to about US$44.09. Here is how bullish and cautious voices are framing that move.

Bullish Takeaways

Bullish analysts see the revised target as consistent with an earnings profile that they view as reasonably aligned with current market expectations for the business and its execution.
The fine tuning of assumptions around profit margins supports the idea that IMAX can potentially sustain a valuation where investors are willing to pay the updated implied P/E multiple.
The higher target, even if modest, signals that bullish analysts are comfortable enough with the revenue outlook to adjust their models rather than hold back or cut estimates.
These analysts tend to frame the current level as leaving some room for upside if IMAX meets or modestly outperforms the operational assumptions behind the revised P/E and earnings forecasts.

Bearish Takeaways

Bearish analysts may point out that the change in target is very small, which in their view suggests limited scope for meaningful re rating unless IMAX can materially improve its revenue or margin profile versus the current assumptions.
Some are likely cautious that the valuation already reflects a fair amount of execution success, leaving less room for error if the business underperforms the earnings and P/E expectations embedded in the US$44.09 target.
There can also be concern that any slowdown in revenue or pressure on margins would require another round of model revisions, which could reduce the target rather than support further increases.
For more cautious investors, the updated target may reinforce a view that IMAX is closer to being fairly valued than clearly mispriced, which could limit enthusiasm for taking on additional risk at current levels.

What's in the News

Breggz launched the Zohn-1 wireless in-ear earphones with IMAX Enhanced and DTS certification, creating the first in-ear hearables in the IMAX Enhanced program and extending the IMAX experience to a new device category focused on personalized, high fidelity audio on the go (Key Developments).
IMAX China subsidiaries IMAX Shanghai Multimedia and IMAX Hong Kong agreed with IMAX Corporation to amend existing services agreements from December 1, 2025, expanding the scope of finance, legal, HR, IT, marketing, theatre design, project management, theatre support and IMAX Enhanced related services, including new business areas (Key Developments).
Under the same amended services agreements, IMAX Shanghai Multimedia and IMAX Hong Kong will pay variable service fees at 110% of actual costs plus overhead for IT, marketing, theatre and IMAX Enhanced related services, and fixed monthly fees of US$50,000 for finance, legal and HR services, with fixed fees linked to the U.S. consumer price index and subject to review if service levels change (Key Developments).
The revised annual caps for total fees under the services agreements for financial years ending December 31, 2025 and 2026 are set at HK$20.8 million each, compared with original caps of HK$10.2 million, with the company citing historical transaction amounts, broader service scope, new business initiatives and potential increases in theatre system maintenance costs (Key Developments).
GKIDS and IMAX Corporation expanded their partnership to bring additional 4K Studio Ghibli restorations to North American theaters from 2026 onward, following the IMAX release of "Princess Mononoke," with future IMAX versions created from new 4K restorations overseen by Studio Ghibli veteran Atsushi Okui (Key Developments).

Valuation Changes

Fair Value: Adjusted slightly higher from about US$43.73 to roughly US$44.09 per share.
Discount Rate: Trimmed modestly from around 8.71% to about 8.64%, reflecting updated risk assumptions in the model.
Revenue Growth: Fine tuned upward from roughly 9.52% to about 9.73% in the forward projections.
Net Profit Margin: Brought down from around 22.39% to about 18.54%, indicating a more conservative margin outlook in the updated model.
Future P/E: Marked up from approximately 28.3x to about 34.2x, implying a higher assumed valuation multiple on future earnings.

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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