Live Nation stock has little upside: Roth

Ahead of the company’s third quarter earnings, Roth MKM analyst Eric Handler remains upbeat about Live Nation (Live Nation Stock Quote, Chart, News, Analysts, Financials NYSE:LYV) but says the stock is currently fairly priced.

On November 2, after market close, LYV will report its Q3, 2023 earnings.

In a research report to clients October 31, Handler maintained his “Neutral” rating and twelve-month price target of $85.00 on Live Nation. The analyst talked about what he expected from the quarter.

“We are raising our estimated revenue and AOI to $7.062bn (+15%) and $715mn (+15%), respectively, from $6,637mn and $710mn,” he said. “Our revision is based on higher Concert revenue which we now anticipate increasing 15% compared to our prior +7% outlook. Pacing the Concerts segment is growth in worldwide events and average revenue per fan of 3% and 12%, respectively. The Ticketing segment is projected to increase 12% fueled by a 7% increase in the number of fee tickets sold and a 5% rise in the average fee per ticket. Sponsorship is forecast to increase 7% driven by a 10% increase in fans partially offset by a 3% decrease in sponsorship revenue per fan. AOI margin is expected to remain flat y/y at 10.1% as higher y/y profitability at Ticketing is offset by the relatively steady margin outlook (~5.2%) at the much larger (and much lower margin) Concerts segment.”

The analyst thinks LYV will post EBITDA of $1.76-billion on revenue of $20.5-billion in fiscal 2023. He expects those figures to rise to EBITDA of $1.95-billion on a topline of $22.0-billion the following year.

Handler adds that the latest noise from D.C. on Live Nation probably won’t amount to much.

“There has been increased concern among investors about a DOJ investigation and legislative actions, neither of which we anticipate would create meaningful headwinds for Live Nation, but has seemingly caused a bit of a valuation overhang. Management recently stated it believes the DOJ is investigating certain business practices rather than re-assessing the merged Live Nation-Ticketmaster entity. These business practices could include ticket exclusivity for venues, all-in pricing, and secondary market ticket selling. With regard to all-in ticket pricing, Live Nation did recently implement this practice, although only for its owned facilities and in states where there is approved legislation (TN, NY, CT). That said, Senator Amy Klobuchar has been combative and has called out Live Nation for not rolling out all-in pricing across all of its partner venues. Live Nation claims it has no right to impose all-in pricing for events at third party venues, which is why it has supported Federal legislation for all-in pricing.”