Why IMAX Stock Trounced the Market Today

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IMAX (IMAX +2.72%) stock was something of a star entertainer on Hump Day. The large-format cinema company posted a relatively large gain that trading session; it rose by nearly 3% on the back of a very positive analyst update issued in the morning.

The show must go on

Benchmark prognosticator Mike Hickey felt compelled to reiterate his buy recommendation and $60-per-share price target on IMAX in a new note. That's quite the bullish outlook, as that $60 is 56% higher than the specialty entertainment company's most recent closing share price.

Image source: Getty Images.

In Hickey's opinion, according to reports, investors had been selling IMAX on diminished expectations for second-quarter box office receipts and the fading hope that management was looking to sell the company, presumably at a generous premium.

This sell-off has notably undervalued the stock, Hickey wrote, and meanwhile, its fundamentals continue to look solid, and this summer's movie slate appears very promising.

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NYSE: IMAX

IMAX

Today's Change

(2.72%) $1.02

Current Price

$38.50

Key Data Points

Market Cap

$2.1BMarket cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.Market cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.

Day's Range

$37.27 - $39.23

52wk Range

$24.20 - $45.52

Volume

1.3M

Avg Vol

1.1M

Gross Margin

57.18%

Undervalued and different

I believe Hickey makes some strong points about the current status of IMAX stock. Many investors, at least until Wednesday, were indeed underestimating its potential at the start of the summer that could very well be an excellent one for the movie business. I'd also point out that the company operates an asset-light business model, as opposed to the more burdensome traditional film exhibition strategy.

Like those suddenly bullish market players who pumped up IMAX's shares that day, I'd consider buying them as well.

IMAX2.80%
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