IMAX: The Next Step in Movies

05/02/2003 12:00 am EST


Tobin Smith

Founder and Chief Research Analyst, Transformity Research LLC

The release of the much-anticipated   Spider-Man and  Matrix sequels on the ultra-large screen IMAX format may indeed bring a new level of excitement to movie-going. In the past, IMAX was known for documentary films; it is now crossing over to mainstream entertainment, and Tobin Smith, editor of ChangeWave Investing, believes this may be the spark to generate gains for the stock.

"IMAX ( IMAX NASDAQ) is the latest new aggressive growth buy from Tobin Smith’s ChangeWave Investing. The shift to digital entertainment creates new and broad demand for an enhanced movie experience, something you really can’t get at home. With a set of major technological changes behind it, IMAX is meeting the demand for an enhanced movie experience. IMAX is the tech company that creates ultra-definition movies and displays them all over the world. In the past they had trouble getting a supply of commercial Hollywood blockbuster films. They also had the problem of lowering the costs to exhibitors installing an IMAX system in their multiplexes, which has been solved with the new IMAX MPX system announced in February.

"Now a new deal with Warner Bros. Pictures puts them in position to cash in on a wave of higher demand to see action movies in all their IMAX glory. Ask any kid or man under 30 what flick they want to see the most this summer movie season and the answer would be the Matrix sequels. Just as Spider-Man saved Marvel Comics, the Matrix sequels are going to pack the new IMAX theaters for the next year or more. Richard Gelfond, co-chief executive of IMAX, said the deal is a ‘watershed event’ for the company, as securing the Matrix sequels begins to answer customers' questions about content. He went on to add that the  Matrix movies met all of the criteria for the first IMAX film that will be able to open the same date as the theatrical release when the third Matrix film arrives in November. Unlike last year's IMAX DMR releases (which upgrade regular prints to IMAX scale) of Apollo 13 and Episode Star Wars II, the Matrix films won't have to be shortened, since IMAX can now handle film lengths of 150 minutes.

"And we love the company's research that shows customers are willing to pay a premium and drive further for the IMAX experience. The stock should be worth $15 at the peak of the Matrix wave, a double from here. As they add more deals for movies–the Spider-Man sequel, for instance, would be perfect–they have a unique, defensible niche that consumers will absolutely love. Everything about the company says they are finally ready to take off. Buy IMAX under $7.50 with a $15 target this time next year."

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