Imax Corp. shares fell Wednesday after a Benchmark Co. analyst said he's cautious about the long-term prospects for growth in the company's theater network.
THE SPARK: Mike Hickey, who started coverage of the company with a "Hold" rating, said that while he remains optimistic about Imax' ability to charge premium ticket prices and expand overseas, he is concerned that the company's network growth may have slowed significantly and that as a result the company's financial results for the next couple quarters could disappoint investors.
THE BIG PICTURE: Imax, based in Canada, makes money by both equipping theaters to show Imax films and through film production and remastering.
It's recently been trying to increase its profits by establishing new theaters in emerging markets like China. At the end of June, it operated 767 Imax theaters in 54 countries.
THE ANALYSIS: Hickey said he's less optimistic about the lineup of Imax films slated for fiscal 2014, such as "Frankenstein," "RoboCop," and "Godzilla," saying that he thinks they will be less of a draw for moviegoers than those shown the year before.
He recommended that investors wait for the stock to fall before buying up shares for the long term. His price target is $29.42, implying he expects shares to be about flat with Tuesday's closing price.
THE SHARES: Down $1.30, or 4.4 percent, to $28.40 after dropping as low as $27.95 earlier in the day. Over the past 52 weeks, the stock has traded between $19.93 and $30.34.