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Imax CEO Rich Gelfond turned a media conference Q&A back on the host today, grilling a Goldman Sachs analyst about the firm’s two-year ‘sell’ rating on the stock when, he said, much of the Street has a ‘buy’.
The two were discussing Gelfond’s $1.1 billion box office projection for Imax, made earlier this year, and if he wanted to revise that upward given the strong summer and success of Oppenheimer. He didn’t, but indicated a shift might come at the next quarterly earnings call.
“But Stephen, that gives me the opportunity to ask you a question,” he said, addressing Goldman analyst Stephen Laszczyk. “Goldman has had a sell on Imax for two years. First the price target was $12, then another sell at $14, then another sell at $15. So you keep moving the price target up, and it’s always a sell…And now its price is $19 and it’s still a sell” when the company is on track to have one of its best years.
“What do we have to do to demonstrate to you and Goldman that we are not an exhibitor? And, by the way, almost every other analyst has a buy on us,” he said, calmly, but in an unusual exchange for an investor conference.
Laszczyk called the rating is “a function of the broader theatrical ecosystem” and Imax being an “extension” of a highly-levered and possibly structurally altered exhibition sector, but said he appreciates differences in the Imax business model, and the company’s success. “We are, I just think, more broadly more negative on the box [office] then we are on any one particular company.”
Gelfond kep on. “I promise, I’ll drop it after this,” he said, “but when I look at Goldman’s five-year model [for Imax], it has a 20% compound annual growth rate…and I look at other Goldman coverage…and companies that have a 20% CAGR are almost all buys.”
Referring to the analyst’s commeont on “structural” issues, he said the exhibition business is looking up as “Cineworld is out of bankruptcy, and AMC has just started accessing its ATM” – filing this morning to sell shares. “You don’t have to answer this, but I just don’t understand.”
“We can certainly discuss that,” Laszczyk said, telling attendees that “anyone interested in our position on Imax can certainly get in touch with me on that.”
Gelfond has long stressed that Imax is not a traditional theater chain, saying today it has “nothing to do with being an exhibitor other than that we show movies.” The comany hurts of course when theaters are closed or there’s little new content, as during Covid. But “the comparison is really misplaced,” he insisted. “We license our technology. We get a royalty. We have no leases. No leverage. We don’t sell popcorn.”
It thrives on evenly-spaced, big event movies. Asked about the ongoing writers and actors strike, which has pushed out some theatrical releases, he called Imax a single-screen operator that needs one big film at a time. Dune: Part Two getting pushed out to 2024 gives it more room to showcase The Hunger Games: The Ballad of Songbirds & Snakes, and Killers of the Flower Moon. “We could play only one of those. Now we can play all three, and we have a great title next year in Dune.”
The impact on Imax and others depends of course on how long the strikes by SAG-AFRA and the WGA last.