Imax Corp. has had a rough early summer, with shares down nearly $10 since early June.
That makes it an opportune time for investors to load up on the stock, argues Canaccord Genuity analyst Aravinda Galappatthige, who sees the company as "an exceptional growth story, with significant momentum." He upgraded the stock today to a "buy" from "hold," noting its price has now retreated to his previously suggested entry point.
Imax has lifted its earnings before interest, taxes, depreciation and amortization from $10-million in 2008 to $101-million in 2010. Mr. Galappatthige sees the second quarter of this year coming in flat, but expects strong earnings growth to be reignited in the third quarter, with EBITDA climbing 84 per cent year-over-year.
"Our forecasts point to a steep climb in profitability in fiscal 2012, with EBITDA projected to go from $87-million in fiscal 2011 to $152-million in 2012. This may seem unrealistic at first glance, particularly given the pullback in fiscal 2011. However, it is very much based on box office growth of 48 per cent year-over-year in fiscal 2012."
That strong box office growth should come from a much stronger film slate for Imax in fiscal 2012, and its growing list of locations. It currently has 283 theatres in backlog.
Upside: Mr. Galappatthige is maintaining a price target of $34 (U.S.).
Northgate Minerals Corp. is acquiring Primero Mining Corp. in a friendly share-exchange transaction that TD Newcrest analyst Steven Green said will improve prospects for both firms. The combined company will create a mid-tier gold producer with three mines - with a fourth one under development - and all are located in favourable political jurisdictions, he said.
Upside: Mr. Green upgraded the stock to a "buy" from "hold" and hiked his 12-month price target by 75 cents to $4 (U.S.).
Sandstorm Gold Ltd. , one of the top performing gold equities this year, has signed an agreement with Donner Metals to acquire 17 per cent of the gold and silver production from the Bracemac-McLeod project in Quebec. Canaccord Genuity analyst Nicholas Campbell commented that the deal builds further momentum for Sandstorm, which is on track to grow annual production by 138 per cent over the next two years as it pursues gold purchase agreements.
Upside: Mr. Campbell raised his price target to $1.55 from $1.40 and rates the company as a "speculative buy."
Towerstream Corp. , a 4G service provider, launched its New York City Wi-Fi offload network this week, bringing the company one step closer to signing its first Wi-Fi customer contract, noted Canaccord Genuity analyst Sanford Lee. "Towerstream appears well positioned to benefit from the general increase in demand for Internet bandwidth, rising smart phone penetration and wireless carrier network congestion issues," he commented.
Upside: Mr. Lee rates the stock as a "buy" with a price target of $6 (U.S.).
Harry Winston Diamond Corp. reported an increase in year-over-year carat production in the second-quarter and remains on track for hitting its production target for the year. But even as average carat prices are trending upwards, Desjardins Securities Inc. analyst John Hughes still feels the stock is expensive and reiterated his "sell" rating.
Downside: Mr. Hughes has a $12 price target on the stock.