'Transformers' primes exhibitor stocks
Chains see gains; Imax up 19% since WednesdayIt appears Wall Street's opinion of the movie exhibition industry has been transformed in a positive way.
Since Paramount's "Transformers: Revenge of the Fallen" debuted Wednesday, stock in companies that benefit from hefty traffic at movie theaters has outpaced broader markets by a crushing margin.
The three big publicly traded U.S. theater chains -- Carmike, Regal and Cinemark -- have seen their shares climb 10%, 7% and 6%, respectively, since Wednesday, while the Dow Jones index is up 2.5% during the same frame. Additionally, shares of in-theater advertising company National CineMedia have climbed 9%.
Shares of Paramount parent Viacom have risen 6% since "Transformers" opened, closing 4% higher Monday at $24.71. Viacom was the largest gainer Monday among media conglomerates.
The biggest beneficiary of the success of "Transformers" -- in terms of rising stock, at least -- might be Imax, shares of which have rocketed 19% since Wednesday.
That is ironic considering that some Imax shareholders seemed to be selling off the stock this month upon learning the company was obligated to show "Transformers" through most of July, meaning it would cut into the time Imax could show Warner Bros.' "Harry Potter and the Half-Blood Prince." "Potter" opens wide July 15 in regular theaters but will not open wide in Imax theaters until July 29 because of "Transformers."
A few weeks ago, Imax stock dropped 4% during a single day when Merriman Curhan Ford analyst Eric Wold opined that the timing of the two high-profile releases was not favorable for Imax.
Shares of Imax, though, have recovered and then some, and Wold is whistling a different tune now that "Transformers" earned $200.1 million domestically during its first five days, with 7.2% of the tally coming from 169 Imax screens.
The per-screen average for "Transformers" on Imax screens was $85,200, compared with an also-impressive $47,255 per theater on regular screens.
Wold previously predicted that Imax would generate $59 million in boxoffice receipts during the second quarter, but he upped that figure Monday to $75 million, based on the strength of "Transformers," and said his prediction still could be short by $5 million.
Wold on Monday also upgraded his opinion on Regal shares from "neutral" to "buy," writing that the sequel's boxoffice performance "was more than meets the eye." The analyst now has "buy" recommendations on Imax, Regal and Carmike.
Wold added that "Transformers" has reduced his anxiety that the final days of the second quarter would be disappointing year-over-year for overall boxoffice numbers because of tough comparisons with this time last year, when Disney's "WALL-E" opened.
"Any investor concerns heading into quarter-end can be alleviated and investors can build positions in the coming weeks into what we believe will be strong second-quarter results and third-quarter outlooks from the theater exhibition group," the analyst said.