D-Box upgraded to Buy as major deal looms

The motion-enabled seats of D-Box Technologies Inc. are moving market watchers to see more upside for the Longueuil, Quebec-based company.

Having just graduated from listing on the TSX Venture Exchange to the main TSX platform last month, Canaccord Genuity added D-Box to its Canadian Focus List on Tuesday. Aravinda Galappatthige, a financial analyst based in the investment bank’s Toronto office, also upgraded the stock from Speculative Buy to Buy on the expectation of a strong share price performance for the second half of the year.

“D-Box has the potential to be the next major premium product available in commercial theatres, following on from the recent growth in 3D, IMAX and the exhibitor branded premium screens,” Mr. Galappatthige told clients on Tuesday.

“The theatre product is making rapid progress both in terms of securing high-quality content (films) from studios and building its distribution by contracting with exhibitors.”

Fueling his bullish 95¢ price target is a series of contracts D-Box has secured around the world in recent months. Theatre operators in Germany, Hong Kong and California have all agreed to use the company’s seats — which move in response to actions on a film, television show or video game — in their cinemas since January, bringing the total number of D-Box-stocked theatres past 90.

“Importantly, we are now seeing much larger theatre chains sign on for D-Box, indicating the growing credibility of the product,” Mr. Galappatthige, referring to a deal D-Box struck just two weeks ago with Rave Digital Media LLC, the fifth-largest theatre chain in the United States.

“Signing a material deal with Regal, AMC or Cinemark will be the trigger that will drive this stock up meaningfully,” he said, noting the recent Rave deal is “potentially a precursor” to such impetus.

Referring to a recently completed $15-million funding round, Mr. Galappatthige also points to the company being “sufficiently financed” as good reason to invest in D-Box now, before the company moves on up to a higher valuation.

jberkow@nationalpost.com