BofA Securities analyst Peter Henderson has initiated coverage of Live Nation Entertainment (LYV) with a ‘Buy’ rating and a price target of $125. Henderson sees Live Nation as a compelling growth investment within the live entertainment sector, driven by a confluence of positive industry trends.
He values the stock using a 14x multiple on CY25E AOI, a valuation that aligns with peer Madison Square Garden Entertainment and reflects favorable structural trends in live entertainment. Henderson identifies several key factors that will propel Live Nation’s long-term growth:
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Shift Towards Experiences:
There’s a notable shift in consumer spending towards experiential purchases, supported by favorable demographic trends. This trend bodes well for Live Nation’s core business.*
Favorable Supply-Demand Dynamics:
The rise of social media platforms is driving increased artist and event discovery, creating a positive supply-demand dynamic within the live entertainment sector.*
Intrinsic Value of Live Events:
Live events hold an intrinsic value that virtual experiences can’t replicate. This prevents the risk of disintermediation, safeguarding Live Nation’s position.*
Rising Sponsorship and Experiential Marketing:
The growth of sponsorship opportunities and experiential marketing is further contributing to Live Nation’s expansion.*
Enhanced Pricing Power:
Increased demand and the implementation of dynamic pricing are strengthening Live Nation’s pricing power.Henderson projects a 4-year revenue CAGR (2023-2027) of 8% and AOI CAGR of 12% for Live Nation. He highlights the company’s extensive scale and vertical integration, allowing it to effectively compete on pricing. By owning multiple segments of the live entertainment chain, Live Nation reduces risk and manages numerous events for a diverse range of artists across different regions.
Barring a significant slowdown in consumer spending on live events, Henderson anticipates multiple revenue and earnings drivers for the live concert sector in the coming years.
At last check on Wednesday, LYV shares were trading down 0.36% at $95.00.
