Macquarie's Movie Breakdown: A New Model For IMAX Box Office Estimates

On Tuesday, Macquarie analyst Matthew Brooks shared the firm’s new box office model for IMAX Corporation (USA) (NYSE: IMAX). The model now features individual film data and forecasts for DMR movies, not only at a domestic level, but also for China and the rest of the world for 2015, 2016 and 2017.

Brooks started by looking into Macquarie’s estimates for the third and fourth quarter of the year, which have been trimmed despite strong U.S. figures, to account for a lower box office in China. The firm now envisions box office sales of $207 million in Q3 (down from $227 million) and sales of $293 million in Q4 – down from $326 million.

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As per the report, the firm’s analysts do not anticipate any Hollywood films grossing more than $100 million in China in the second half of the year as they have in the past five years. In fact, “It would be a bullish signal for IMAX if Hollywood films were to start grossing >$100 million in China again,” the note read.

For the full 2017, Macquarie now models global box office sales of $1.2 billion, up 16 percent on the back of the network roll-out.

Having said this, the experts believe a boom in the Chinese box office could lead them to boost their 2017 estimates. But, becoming a hit in China is no easy task for a Hollywood film, as many of the highest grossing ones, like "Deadpool," are not allowed in the country by censors.

Macquarie maintains an Outperform rating and $41 price target on shares of IMAX.

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Disclosure: Javier Hasse holds no interest in any of the securities or entities mentioned above.