Imax: Hunger Games And The Avengers Further Extends Bullish Stance

| About: IMAX Corporation (IMAX)
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Thursday was a happy day as an Imax (NYSE:IMAX) shareholder. Shares were up a meager one percent on some rather big news. Imax announced that The Avengers and The Hunger Games will be coming to their oversized screens in 2012. Imax, which also was one of my top ten stock picks for 2012, has an amazing lineup for 2012 and today strengthens that list of films and further extends my bullish stance.

The Hunger Games will have a one week run on Imax screens and should be able to sell out numerous showings during the seven day span. On March 23rd, the movie from Lions Gate Films (LGF), rolls into theaters and is expected to be one of the highest grossing movies before the summer blockbusters come out. Similar to the Twilight series, The Hunger Games is based on a bestselling book from a series. The three books are popular with teenagers and young adults, which should translate nicely into box office dollars.

In the two articles I have written about The Hunger Games, I have predicted box office revenue for the entire film franchise. The chart below shows those predictions:

Movie Opening ($Mil) N. America ($Mil) Rest of World ($Mil) Total ($Mil)
The Hunger Games 75 210 200 410
Catching Fire 83 265 300 565
Mockingjay Part I 90 290 375 665
Mockingjay Part II 100 300 400 700

The box office take of movies on Imax screens is normally 10-15% of total box office revenue. With an estimated $75 million in opening box office revenue, The Hunger Games would make $7.5 million from North American screens alone during its limited one week run on the larger screens.

Sandwiched in between The Lorax, John Carter, and Wrath of the Titans, The Hunger Games is the fourth movie to be shown on Imax screens in the month of March. The limited one week run is because of the prior commitment to Wrath of the Titans, which opens on Imax screens March 30th.

Lions Gate Films also wins with this deal as it represents the first movie of theirs to be released on Imax screens. With the company's recent purchase of Summit Entertainment, they will also likely have Breaking Dawn Part 2 on Imax screens as well. I recommended buying of Lions Gate Films in my last article about the company based on the Summit Entertainment buyout. The Hunger Games, Catching Fire, and Mockingjay are the three bestselling books on Amazon (NASDAQ:AMZN). As I wrote before, Lions Gate Films truly has a blockbuster film franchise under its ownership.

May 4th will bring The Avengers to Imax screens around the world. The highly anticipated superhero blockbuster from Marvel Studios (NYSE:DIS) brings together Captain America, The Incredible Hulk, Thor, and Hawkeye together to save the world.

The first Thor movie generated $6.6 million on Imax screens in its opening weekend. This represented about ten percent of the $65.7 in revenue in North America opening weekend. Based on the box office revenue of Captain America and Thor, I have predicted box office revenue for The Avengers.

Movie Open ($Mil) N. America ($Mil) Rest of World ($Mil) Total ($Mil)
Captain America 65 177 192 369
Thor 66 181 268 449
The Avengers 95 375 350 725
The Avengers Imax 12 15 20 35

The Avengers will have seven days on Imax screens before Dark Shadows and Men in Black 3 hits the big screen. The superhero movie has plenty of time to rack up some nice box office returns for Imax.

The movies will both only play for seven days on Imax screens but have clear hype already behind them. Both are based on previous material and already have an installed fan base. Midnight releases can be expected for both. The movies will also play for longer than seven days on foreign screens. Lately, Imax has been adding screens in key emerging markets like India and China.

Imax shares trade at $21.42, which is still 44% off the fifty two week high of $38.00. I have been a shareholder of the company for many years and am happy to continue holding my shares. The lineup of 2012 movies on Imax screens will not offer many buying opportunities, but now is one.

Disclosure: I am long IMAX.