Morgan Stanley initiates IMAX stock with overweight rating on box office growth

Morgan Stanley has initiated coverage on IMAX Corporation (NYSE:IMAX) with an optimistic overweight rating, projecting significant growth in the company's box office revenue. The investment bank has set a price target of $63.00 for IMAX shares, representing an estimated 18% upside from the current trading price of $53.30. This projection is based on a forecast of $1.6 billion in global IMAX box office revenue by 2027 and $1.7 billion by 2028, both reflecting a robust 6% compound annual growth rate.

Morgan Stanley anticipates IMAX's revenue to expand at an 11% compound annual growth rate through 2028, with margin improvements projected to drive profitability above 50% in 2027 and 2028. The company's gross profit margin currently stands at nearly 60% on $416 million in revenue for the past year, and the bank predicts EBITDA and earnings per share to grow at 16% and 21% compound annual growth rates, respectively, through 2028.

IMAX's free cash flow conversion is expected to remain above 50% through 2026 and 2028. The $63 target equates to about 20% upside on the stock, calculated using an enterprise value to next twelve-month EBITDA multiple of 17 times, which is lower than the current trailing EV/EBITDA of 22.7 times. However, InvestingPro analysis suggests the stock may currently be overvalued relative to its fair value estimate.

For further analysis, investors can access IMAX’s comprehensive Pro Research Report. Notably, IMAX recently reported impressive second-quarter 2026 earnings, with adjusted earnings per share increasing by 65% to $0.43 and revenue growing by 12% to $103 million. The company credits this growth to increased demand for premium-format screenings, particularly the success of films like "The Odyssey," and a rise in system installations.