Shares of IMAX (NYSE:IMAX) are down 6.2% in 2014, after seeing a strong 30% performance in 2013. JPMorgan recently upgraded shares to overweight with a price target of $32. JPMorgan sees IMAX as the "best play on a very promising 2015 box office year for the industry." With a new partnership with Disney (NYSE:DIS), this assumption seems dead on.
IMAX and Disney announced a deal that includes "highly anticipated live-action tentpole films". The deal kicks off with the Marvel sequel "Captain America: The Winter Soldier". The deal also includes "Maleficent", "Guardians of the Galaxy", "Avengers 2: Age of Ultron", "Tomorrowland", and "Star Wars VII".
Obviously the signing of "Avengers 2" and "Star Wars VII" is incredibly huge for IMAX. These two Disney movies should see huge box office results and post impressive results for IMAX along the way. "The Avengers", which was also on IMAX, saw a domestic box office of $623.4 million. The total box office of the movie worldwide stands at $1.52 billion. These figures rank the movie number three all time in domestic and worldwide markets. The movie saw huge IMAX numbers, including $15.3 million domestically in its first three days. The movie also set an IMAX international record with $21.4 million during a three day run.
While there has only been one Avengers movie to use in comparison, moviegoers have been treated to six Star Wars movies, although three of them have to be adjusted for inflation. The most recent movie in 2005 saw domestic box office of $380.3 million and $848.8 million worldwide. Of course, the new movie will be the first movie in a new trilogy which would compare the movie better to "Star Wars Episode I". That movie, released in 1999, grossed $474.5 million domestic and $1.03 billion worldwide. The new Star Wars movie should post numbers higher than that when accounting for inflation, additional international theaters and the IMAX effect. My guess would be $600 million domestic and $1.4 billion worldwide. I believe both "Avengers 2" and "Star Wars VII" will surpass the $100 million mark on IMAX.
Here is a look at the current 2014 lineup for IMAX:
· 4/4 "Captain America: The Winter Soldier"
· 4/18 "Transcendence"
· 5/2 "The Amazing Spider-Man 2"
· 5/16 "Godzilla"
· 5/30 "Maleficent"
· 6/6 "Edge of Tomorrow"
· 6/27 "Transformers 4"
· 7/25 "Jupiter Ascending
· 8/1 "Guardians of the Galaxy"
· 11/7 "Interstellar"
· 11/21 "Mockingjay Part 1"
· 12/17 "The Hobbit: There and Back Again"
A couple of those movies are the part of a huge 20 picture deal signed with Time Warner (NYSE:TWX) back in 2012. That deal brought big movies like "Gravity" and "Man of Steel" to IMAX screens. "Gravity" became only the second movie to hit the $100 million mark for IMAX screens earlier this year.
Also standing out to me is the huge gap between August 1st and November 7th. I'm guessing a couple of movies will be inserted in there and also think July could use another movie. Here is a look at possible movies that could be added to the IMAX lineup.
· 7/18 "Dawn of the Planet of the Apes"
· 8/8 "Teenage Mutant Ninja Turtles"
· 8/15 "The Giver"
· 8/15 "The Expendables 3"
· 8/22 "Sin City: A Dame to Kill For"
· 9/19 "The Maze Runner"
· 10/3 "Gone Girl"
· 10/24 "Paranormal Activity 5"
IMAX also has the following signed for 2015:
· February: "Seventh Son"
· May: "Avengers 2: Age of Ultron"
· May: "Tomorrowland"
· December: "Star Wars VII"
The 2015 list is going to fill up rather quickly as more studios want the additional box office by having their movies on IMAX. "Mockingjay Part 2" will likely be added to that list for November, as all of The Hunger Games movies have been shown on IMAX screens. "Insurgent", the sequel to "Divergent" should also hit IMAX, as the first movie in the trilogy performed well on IMAX screens. Also, "Kung Fu Panda 3", "Jurassic World", "James Bond 24" and "Mission Impossible V" could all get IMAX treatment as they are sequels to movies that have been on IMAX screens before.
The two most recent big pictures released on IMAX saw strong results. "Divergent" saw 16% of its $56 million opening weekend come from IMAX screens. "Noah", which was released this past weekend, had $6.2 million, or 14% of its opening box office come on IMAX screens.
Aside from the strong lineup of movies to be released on IMAX screens, the company continues to offer a good investment with its international growth. At a presentation in February, the company said it had 140 screens in China, with an additional 240 in the backlog. These two figures come close to the company's original goal of 400 screens in the country, a figure that will likely be raised. The company also cited growth in Indonesia and Malaysia as key areas where the company is increasingly expanding. In March, IMAX announced the addition of two theaters in Mongolia, which will mark the 58th country IMAX is in.
During the fourth quarter, IMAX saw its movies bring in $244 million at the box office. The company installed 58 theaters and reported 119 new signings. The company signed a total of 277 theater commitments during the fiscal year, which was double the number from 2012 and a new company record. This has led to a record backlog of 407 theaters.
In the last fiscal year, IMAX movies made $727 million at the box office. This amount is then split with the movie companies, theaters, and IMAX. This was also good enough for a per screen average of $1.2 million, towards the high end of recent IMAX history. Also for the first time IMAX had more than 50% of its revenue from its international division.
Despite the strong backlog and continued international expansion, analysts may be underestimating the revenue IMAX will post in fiscal 2015. Current estimates on Yahoo Finance call for $354 million, an increase of 15%. I believe the company will come in way above this as they continue to add blockbuster movies. "Gravity" made $100 million on IMAX screens due to positive word of mouth, stunning visual effects, and the Academy Awards season. I believe a couple of the 2015 movies have the potential to hit the $100 million mark for IMAX. I continue to hold a long position and think the company will exceed expectations going forward.
Disclosure: I am long IMAX. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.