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Here's Why You Should Retain IMAX in Your Portfolio Now

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On Dec 27, we issued an updated research report on IMAX Corporation (IMAX - Free Report) . The stock has been downgraded to a Zacks Rank #3 (Hold) from a Zacks Rank #2 (Buy).

Positives

In June, the company had announced a new share-repurchase as well as a cost-reduction program, aimed at increasing its worth.

The share repurchase plan authorizes the buyback of up to $200 million shares by Jun 30, 2020. This new initiative raises optimism in the stock.

Additionally, the company’s cost-cutting efforts to generate around $20 million cost savings on an annual basis, is encouraging. The objective is to increase profitability, facilitate operating leverage and also generate free cash flow.

IMAX is making continued efforts to expand its presence across the globe. To this end, the company has inked multiple deals with various companies. The latest was inked with Twentieth Century Fox Film, a division of 21st Century Fox. The deal extends the partnership of the two involved parties through 2019. Moreover, in a bid to expand further in North America, the company signed an agreement with Malco Theatres. This sales contract covers two IMAX theatres.

Imax Corporation Price and Consensus

 

Imax Corporation Price and Consensus | Imax Corporation Quote

 

On another positive note, the Federal Communications Commission's (“FCC”) decision to relax media ownership rules has been a boon to media stocks and IMAX is no exception.  In November, the FCC approved a sweeping rollback of regulations that posed as stumbling blocks to consolidation in the media and entertainment industry.

The Zacks Consensus Estimate for 2017 has been revised 4.6% upward in the last 60 days. This further holds promise for the stock.

In view of the above tailwinds, we believe investors would do better to hold on to the IMAX stock at the moment.

Key Picks

Some better-ranked stocks in the broader Consumer Discretionary sector are American Woodmark Corporation (AMWD - Free Report) , American Public Education, Inc. (APEI - Free Report) and Churchill Downs, Incorporated (CHDN - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of American Woodmark, American Public Education and Churchill Downs have gained more than 37%, 8% and 26%, respectively, in the last six months.

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