IMAX Is Becoming Central to Moviegoing—And The Rally May Not Be Done

Key Points

• Morgan Stanley initiated IMAX at Overweight with a $63 price target, implying roughly 21% upside from about $52, citing a durable growth story.
• Bulls argue IMAX is becoming a self-reinforcing network business, pointing to record box office from The Odyssey and only about 35% market penetration so far.
• Risks include a recent downgrade to Hold, insider selling of about $25.5 million, a stock price testing its 50-day moving average, and fading momentum signals.

Morgan Stanley initiated coverage on IMAX NYSE: IMAX on Sept. 24 at Overweight with a $63 price target. Its argument was simple: IMAX is becoming central to the moviegoing experience. Investors agreed, sending the stock to a new 12-month high.

Initiations deserve attention because firms choose where to spend their research time. Morgan Stanley chose a stock already up more than 40% this year.

That suggests it sees a durable story, not a one-summer pop. Rosenblatt agrees, with a $65 target. The total analyst count stands at 11 Buys and three Holds.

Yet the market still treats IMAX like a cyclical box-office bet. When a big film hits, the stock rises. When the slate looks thin, it fades. Thursday's 5% slide shows how quickly that sentiment can swing.

The bull case says this framing misses the bigger picture. IMAX may be turning into a flywheel. Flywheels don't depend on any single release. With the stock trading at about $52, Morgan Stanley's target now implies roughly 21% upside. But there are real reasons for caution as well.

The Flywheel Behind the Bull Case

The flywheel works like this. More screens attract more filmmakers. More IMAX-shot releases draw bigger audiences. Higher box office funds mean more screens. Morgan Stanley projects global IMAX box office rising from $1.5 billion in 2026 to $1.7 billion in 2028. The 2026 figure already exceeds the company's guidance of $1.4 billion.

"The Odyssey" is the proof point. It became the fastest film in IMAX history to pass $200 million. Rosenblatt says it has generated $485 million in IMAX box office, and August set a monthly record of $322 million. Studios notice numbers like that. There's very little that's original in Hollywood, and The Odyssey gives them a template to copy.

Consumer sentiment supports the story. IMAX fills a real desire for a premium experience that can't be achieved with a home theater system. The $5 to $10 premium per ticket isn't excessive, even for lower-income consumers. When moviegoing becomes an event, people are willing to trade up.

IMAX Revenue Could Outpace Box Office Growth

Morgan Stanley forecasts revenue growth of about 13% over the next two years. That's roughly double its projected box office growth of about 6% a year. That's roughly double its projected box office growth of about 6% a year. The gap raises a fair question: is that growth already priced in?

The answer starts with how IMAX makes money. It doesn't book the full box office. It earns a share of ticket sales, plus revenue from selling, leasing, and maintaining its systems. As the network expands, those streams can outgrow the box office take itself. Gross margins already run near 60%, so added revenue can lift earnings quickly.

Valuation offers another clue. Morgan Stanley's target uses about 17x forward EV/EBITDA, slightly above the stock's trailing multiple of 16x. In other words, the bank isn't betting on multiple expansion. It's betting on earnings growth.

The Cost of Expanding IMAX’s Global Footprint

In its Q2 2026 earnings report, IMAX said it has penetrated only about 35% of its available market. That's a long runway. It also raises questions about cost.

The easiest markets tend to get captured first. Reaching the remaining 65% could require more investment per screen. IMAX often shares system costs with exhibitors to close deals. That isn't a red flag. But investors may wonder whether growth spending will pressure future earnings.

IMAX Stock Faces Several Risks After Its Rally

Not everyone is chasing the rally. One ratings service, Wall Street Zen, cut IMAX to Hold last weekend. The stock is up more than 30% in the last three months. The consensus price target, around $55, sits only modestly above the current price. Insiders also sold about $25.5 million of stock in the 90 days through early September.

The chart adds a near-term caution. Thursday's drop put shares right on the 50-day moving average of approximately $51.60. The MACD line also crossed below its signal line, a sign of fading momentum. If the 50-day holds as support, the uptrend stays intact. A decisive break below it would suggest a period of consolidation.

There's another question. Reports surfaced in May that IMAX was exploring a sale. CEO Rich Gelfond has left the door open, but no buyer has emerged. It's too early to draw conclusions. Still, IMAX has explored strategic options before without a deal. A takeover premium shouldn't anchor anyone's thesis.

IMAX Stock Comes Down to Perception Vs. Fundamentals

The debate comes down to how investors see IMAX. If it's a box-office bet, a 40%-plus run looks mature. If it's a network business with a growing revenue base, the market may still be catching up.

The 50-day average will settle the near-term question. Screen growth and revenue will settle the long-term one. On those measures, the rally may only be halfway done.