Why Investors Might Walk Out of IMAX

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of IMAX sank 5% today after Benchmark initiated coverage on the jumbo-movie-screen technologist with a hold rating.

So what: Along with the call, analyst Mike Hickey planted a price target of $29.42 on the stock -- pretty much exactly where it closed on Tuesday -- suggesting that he sees limited upside at current levels. While Hickey is still positive on IMAX's near-term global growth prospects, he thinks that investors might not be baking enough long-term performance risk into the valuation.

Now what: Based on sluggish box office numbers lately, Benchmark thinks that IMAX's third- and fourth-quarter results could disappoint Wall Street. "We remain optimistic near term over the IMAX brand and premium ticket experience they offer to a rapidly unfolding international growth opportunity," Benchmark noted. "We remain cautious over the Company's ongoing performance risk, particularly over a network growth scenario that appears to have slowed meaningfully." With the stock still up more than 40% from its 52-week lows and trading at P/E of nearly 50, I'd agree with Benchmark and wait for a wider margin of safety before jumping in. 

More reliable ways to build wealth
Dividend stocks can make you rich. It's as simple as that. While they don't garner the notoriety of high-flying growth stocks, they're also less likely to crash and burn. And over the long term, the compounding effect of the quarterly payouts, as well as their growth, adds up faster than most investors imagine. With this in mind, our analysts sat down to identify the absolute best of the best when it comes to rock-solid dividend stocks, drawing up a list in this free report of nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.

The article Why Investors Might Walk Out of IMAX originally appeared on Fool.com.

Fool contributor Brian Pacampara has no position in any stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story