Is IMAX Stock Still a Buy Amid Rising Valuation and Strong Momentum?

The question of whether IMAX (NYSE: IMAX) remains a compelling investment has taken on renewed urgency as the stock trades at elevated valuation multiples amid a backdrop of robust financial performance and diverging analyst expectations. With a trailing price-to-earnings (P/E) ratio of 52.63 and a forward P/E of 24.59, IMAX's valuation appears stretched relative to historical averages, yet its recent earnings and strategic momentum suggest the market may be pricing in a future of sustained growth. This analysis evaluates the stock's valuation reasonableness, the structural drivers underpinning its momentum, and the implications of conflicting analyst fair value estimates.

Valuation Metrics: Elevated but Justified?

IMAX's valuation metrics stand out in the cinema and entertainment sector. Its price-to-book (P/B) ratio of 5.74 exceeds the industry average of 4.07, while its price-to-sales (P/S) ratio of 5.27 and enterprise value/EBITDA (EV/EBITDA) ratio of 18.23 also suggest a premium to peers. These multiples raise the question: Is the market overpaying for IMAX's growth, or is the premium warranted by its unique value proposition?

The company's recent financial performance provides a partial answer. In Q3 2025, IMAX reported record revenue of $106.7 million, a 16.6% year-over-year increase, driven by a 49% surge in Content Solutions segment revenue to $44.8 million. This segment, which includes premium content licensing and immersive experiences, now accounts for a significant portion of IMAX's revenue and operates at a 71% gross margin-up from 55% in the same period in 2024. Such margins, combined with a 50% year-over-year rise in global box office revenue to $367.6 million, suggest IMAX is capturing value from its technological differentiation and content partnerships.

However, the P/B ratio's elevation above industry norms warrants caution. As noted by NYU Stern's valuation database a P/B ratio exceeding industry averages often signals either overvaluation or the market's anticipation of superior future returns. For IMAX, the latter seems plausible given its expansion of 38 new system installations in Q3 2025, bringing the year-to-date total to 95-a 8% increase year-over-year. These installations, coupled with a $375 million credit facility expansion and $544 million in available liquidity, position IMAX to capitalize on its growth trajectory without overleveraging.

Diverging Analyst Estimates: Optimism vs. Caution

The analyst community remains split on IMAX's fair value. The consensus price target of $39.30 implies a modest 3.05% upside from the current price of $38.14, but individual estimates span a wide range-from $32.00 to $47.00. Wedbush's recent upgrade to a $46.00 target (a 17.95% upside) and Goldman Sachs' shift from "Sell" to "Neutral" with a $34.00 target (a 54.55% increase from its prior estimate) highlight growing confidence in IMAX's ability to execute its growth strategy.

Yet, not all estimates are bullish. A valuation model pegging IMAX's fair value at $60.55 suggests the stock is undervalued by over 20%, while another model placing fair value at $38.81 indicates the stock is nearly in line with intrinsic value. This divergence reflects differing assumptions about the sustainability of IMAX's current growth rates and its ability to monetize its expanding footprint. For instance, the $60.55 estimate likely incorporates optimistic projections for the 2026 content slate, which includes tentpoles like The Odyssey and Narnia in Q3 2025, whereas the $38.81 estimate may assume a normalization of box office performance post-pandemic.

Structural Growth Drivers: A Tailwind for Long-Term Value

IMAX's momentum is underpinned by structural trends in the entertainment industry. The Content Solutions segment's success-driven by partnerships with major studios and the proliferation of premium large-format (PLF) content-demonstrates the company's pivot from a theater installation play to a content-driven growth story. The segment's 71% gross margin underscores the profitability of this shift, as IMAX captures a share of box office revenue from films shot in its proprietary formats.

Moreover, the global rollout of new systems-particularly in emerging markets-positions IMAX to benefit from the long-term trend of cinema modernization. With 38 installations in Q3 2025 alone the company is expanding its network, the company is expanding its network at a pace that could drive recurring revenue from both content licensing and theater operations. This network effect, combined with a 2026 content slate featuring high-profile films, creates a flywheel effect: more theaters attract more content, which in turn drives higher box office revenue.

Risks and Considerations

Despite these positives, investors must weigh several risks. The elevated P/B ratio suggests the market is pricing in significant future growth, which may not materialize if box office performance softens or competition intensifies. Additionally, IMAX's reliance on a handful of high-budget films for Content Solutions revenue introduces volatility. For example, the success of F1: The Movie and Demon Slayer: Infinity Castle in Q3 2025 was exceptional but not guaranteed to repeat.

Furthermore, the divergence in analyst estimates highlights uncertainty about IMAX's ability to maintain its current growth trajectory. While the company's liquidity and credit facility expansion provide flexibility, any missteps in content selection or theater deployment could strain its balance sheet.

Conclusion: A Buy for the Patient, Growth-Oriented Investor

IMAX's valuation appears elevated but not unreasonable when viewed through the lens of its structural growth drivers and recent financial performance. The company's pivot to a content-centric model, combined with its expanding global footprint and a robust 2026 slate, provides a compelling case for long-term value creation. While the consensus analyst target of $39.30 suggests limited near-term upside, the wide range of fair value estimates-from $32.00 to $60.55-reflects the market's uncertainty about the sustainability of IMAX's momentum.

For investors with a multi-year horizon, IMAX remains a buy, provided they are comfortable with the valuation premium and the risks inherent in a growth story. The key will be monitoring the execution of its 2026 content slate and the pace of new installations. If IMAX can continue to deliver on its promise of premium content and theater expansion, the current valuation may prove to be a bargain in hindsight.