Live Nation Entertainment rating rose to buy
2022.11.28 13:59
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Live Nation Entertainment rating rose to buy
Budrigannews.com -Live Nation Entertainment (NYSE:) received an upgrade from a Citi analyst.in a research note on Monday, the company switched from Neutral to Buy and lowered its price target for the stock from $90 to $82.
The analysts said that the company thinks Live Nation’s risk-reward ratio is better.
“We believe that the shares are worth $90 per share if Live Nation remains a single company. We estimate that the shares are worth $48 in the event that Live Nation is forced to split into two businesses. The analysts wrote, “We ascribe an 80% likelihood that the company remains intact and a 20% likelihood that Live Nation is forced to end the merger in 2010.”
However, they identified four obstacles that they believe the buy-side is concerned about for the business.
Over the past year, Live Nation’s equity has been under pressure. We believe four things are causing concern on the buy side:”The analysts provided an explanation of the factors that could lead to a DoJ investigation into the company’s competitive practices, including the following: 1) the achievability of Street estimates in 2023; 2) the higher cost of capital has put pressure on Live Nation’s multiple; and 3) the fallout from the inability to meet the robust demand for Taylor Swift tickets.”
They stated, ” Regarding the potential DoJ inquiry:According to press reports (The New York Times, November 18, 2022), the Department of Justice has initiated an investigation into the company’s competitive practices.
The DoJ may be attempting to reverse the merger of Live Nation (SFX) and Ticketmaster in 2010. This is the most pessimistic interpretation.We believe that if the Department of Justice succeeds in its attempt to end the merger:a) Live Nation alone would bring in 13.5 times EV-EBITDA; b) Ticketmaster alone would bring in 8.0 times EV-EBITDA; and c) the company would lose $100 million due to synergies.
This suggests that the equity value would likely be $48 in the event of the company’s dissolution.This scenario has a 20% chance of happening, and there is an 80% chance that things will stay the same.
At the time of writing, Live Nation shares have gained more than one percent.
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