The Las Vegas Sphere, a captivating entertainment venue that opened its doors in 2023, has captured the hearts of music, movie, and sports fans alike. This success hasn’t gone unnoticed by Wall Street, as JPMorgan analyst David Karnovsky has upgraded shares of Sphere Entertainment Co (SPHR) from Neutral to Overweight, raising the price target from $37 to $57.
Karnovsky’s optimism stems from the venue’s proven business model and strong financial performance. Sphere Entertainment recently reported a fourth-quarter revenue of $273.4 million, exceeding the Street consensus estimate of $271.3 million. This success, according to Karnovsky, demonstrates the Sphere’s established presence in the destination tourism market, attracting both travelers and artists.
The analyst believes there is significant potential for further growth. He highlighted the company’s plans to improve the operating model by introducing additional original content and exploring new venue use cases. Karnovsky also expressed confidence in Sphere’s ability to secure international franchise partners, a move he believes could significantly increase revenue and is not currently reflected in the stock price.
Beyond international expansion, Karnovsky sees opportunities for revenue growth through new shows, more cinematic originals, and the use of the Sphere as a sports venue, as exemplified by the upcoming UFC fight. The analyst’s confidence in Sphere’s future is further bolstered by the company’s executive compensation structure, with CEO James Dolan holding options to purchase shares starting at $75 and escalating in increments of $25 up to $150. This suggests a strong belief in the long-term growth potential of the company.
Sphere’s stock price has already reflected this positive sentiment, rising 45% year-to-date in 2024. Following the analyst upgrade, shares closed 6.4% higher at $49.22 on Friday. With its proven success and exciting future prospects, the Las Vegas Sphere is poised to continue captivating audiences and driving significant value for its investors.
