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Gravity’s Strong Showing on Imax Screens Should Boost Shares Back Up

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Back in September, shares of IMAX ((IMAX)) were trading above $30. The company had just hit a new 52 week high at $30.34. Then going into October, shares began falling as several analysts cut their price targets. Shares are now up only 16.7% on the 2013 year and are having a great start to the fourth quarter thanks to the success of Gravity.

Analysts and investors must be missing the news of Gravity’s successful October opening. The movie, which stars Sandra Bullock and George Clooney, just broke the October box office record. The movie also scored a huge 10 day haul for IMAX, who may benefit more than Warner Brothers ((TWX)) from its movie. During its opening weekend, Gravity made $15.1 million on IMAX screens. The movie was released on over 400 screens and saw impressive results in North America ($11.8 million) and international regions ($3.3 million).

In its second weekend, Gravity continued its impressive run with $44.3 million in domestic markets. This was a decrease of only 21% from its opening haul. The movie also saw an additional $9 million from IMAX screens. This marked the second highest second weekend in IMAX history, even ahead of The Dark Knight Rises. The share from IMAX and other 3D theaters continued to rise, as it increased from 80% to 82% in the second weekend.

Gravity certainly is not done with its box office haul. In fact, the movie will stay on IMAX screens through the rest of October and should be able to continue to help pad IMAX’s fourth quarter revenue and earnings. The movie also has several international territories where the movie will be shown. The movie will launch in the United Kingdom, Japan, Korea, Mexico, and France in the near future. China will show the movie as one of its annual imported films. China only allows 34 international movies to be shown in the country every year. With a huge theater count in China, IMAX stands to benefit from this recent announcement.

On October 24th, IMAX will report third quarter earnings. This quarter will include the company’s impressive results from The Wizard of Oz during a one week exclusive engagement. I highlighted this showing in a previous article. The movie made $3 million in 318 locations for IMAX. Analysts on Yahoo Finance are expecting the company to post earnings per share of $0.06. Revenue is expected to come in at $52.6 million. With decent showings from movies like Pacific Rim, 300: Rise of an Empire, Riddick, and Elysium, revenue and earnings could surprise and come in ahead of analysts’ targets.

The fourth quarter for IMAX will be huge and is why investors should get back into the stock at current levels. Gravity is setting up for a strong quarter, which will include blockbusters Catching Fire and The Hobbit. The quarter will also have Ender’s Game and the Russian release of Stalingrad, which has already made over $2 million. With this strong lineup, the company should see an amazing fourth quarter and could send shares past $35 by January.

 

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Author Disclosure:
Author is long shares of IMAX.
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