UPDATE: $IMAX – Profit PROFIT

Even though profits were taken at higher prices, many BTD followers use our EXIT POINTS to determine range of the stock’s potential direction. However in this instant, EXIT at current levels justified. — Look at another opinion. Imax: Looking past 4Q results concerns about business risk remain – Merriman (16.33 +0.18) — Merriman notes that IMAX reported 4Q results with revs of $54.2 mln vs. the firm’s $42.9 mln est (consensus of $46.7 mln) and EPS of $0.06 vs. the firm’s estimate of $0.08 (consensus of $0.07). GM’s came in at 51.4% vs. the firm’s est of 54.0% and operating margins came in at 11.6% vs. the firm’s est of 19.6%. Looking past the co’s 4Q results, the firm believes that IMAX’s current valuation on FY11 estimates of 6.0x revenues, 15.6x EBITDA and 35.2x EPS reflects investor optimism that the box office success of Avatar will be replicated with 3D releases in 2010 and beyond. However, the firm believes IMAX’s box office results and overall profitability are likely to decline considerably with the influx of additional 3D competition — something the firm believes many investors have not fully considered. The firm feels that an EBITDA multiple of 10-11x on their FY10 estimate of $71 mln is more than appropriate given the current outlook — yielding downside risk for IMAX shares to the $10.00-11.00 level. However, should the firm’s predictions on business model disruptions prove correct, they could see downside well below those levels.