On Monday, Imax Corp (NYSE:IMAX) shares surged more than 4% after Sony Corp’s (JPTSE:6758) latest instalment of the Venom film series broke the domestic box office record in the pandemic era. The film, Venom: Let There Be Carnage delivered an opening weekend box office of $90 million, surpassing expectations and every other film released during the pandemic.
On the other hand, the UK’s latest instalment of the James Bond films delivered an industry-wide overseas turnover of $119 million in the opening weekend.
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Venom 2 opened in 4,225 theatres, domestically, implying an average turnover of $21,325 per screen. The market interpreted the numbers positively, boosting optimism ahead of the festive season.
Time to buy IMAX stock?
From an investment perspective, IMAX shares are trading at a reasonable P/E ratio of 27.30. Moreover, analysts expect its earnings per share to grow by 284% next year, and at an average annual rate of 36.60% over the next five years.
Therefore, although the stock is up nearly 50% since 19th August, it could still be appealing to growth investors willing to overlook this year’s earnings decline of 418%.
Therefore, it may not be too late to invest in Imax shares.
Is a pullback inevitable?
Technically, Imax shares appear to be trading within an ascending channel formation in the intraday chart. As a result, the stock has recently rallied to the overbought conditions of the 14-day RSI.
Therefore, the stock could pull back momentarily before resuming the bull run. As a result, investors could target short-term pullbacks at $19.03, or lower at $17.35. However, if the rally continues to the foreseeable future, it could find resistance at $22.03, or higher at $23.44.
Time to take some profits?
In summary, given IMAX’s 50% gain over the last seven weeks, it could be time to take some profits ahead of the next rally.
Moreover, with analysts expecting earnings to fall by more than 400% this year before recovering next year, IMAX shares could pull back.
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