Imax Unveils New Taiwan Deal as Analysts Debate Theater Signing Momentum

The large format exhibitor said it sold three more screens to VieShow Cinemas a day after the market punished its stock on new screen install guidance.

MONTREAL - Imax on Friday unveiled a three-theater deal with Taiwanese exhibitor VieShow Cinemas, a day after the stock market knocked its stock down in response to new screen installation guidance.

VieShow, which already has six Imax theaters in operation, is to open a new screen in Tainan in 2014, with the second and third systems to open in 2015 at locations to be determined at a later date.

“Today's agreement is a direct result of Imax's strong contribution to our box office results and the tremendous popularity of Imax among our patrons, underscored most recently by our strong opening weekend for The Dark Knight Rises," Jimmy Yuan, chairman of VieShow Cinemas, said in a statement Friday.

On Thursday, stock in Imax fell by $1.08, or 4.6 percent, to $22.46, as the installations pace at Imax disappointed market watchers.

Michael Pachter, an entertainment analyst at Wedbush Securities, downgraded stock in Imax to neutral and lowered his price target for shares in the exhibitor from $27 to $21.

“We had expected guidance to rise more significantly than it did in Q2,” Pachter wrote in his investor note after Imax MAX raised its full-year 2012 install guidance to 110 systems, from 95 to 100 systems.

At the same time, Eric Handler, an analyst at MKM Partners, in his own note forecast Imax would install 120 screens in 2012.

“… recent contract signings (47 screens since May) and a healthy pipeline of screen inquiries make us comfortable that installations for 2012 can still reach at least 120 screens and surpass the updated guidance of 110 screens,” Handler wrote.

“We think the quarter was solid with the main drivers of the operating model intact, including continued Imax network growth and international box office growth,” Vasily Karasyov, an analyst at Susquehanna Financial Group, added in another bullish investor note for Imax on Friday.

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