Goldman Sachs initiated Madison Square Garden Entertainment Corp (NYSE:MSGE) with an Equal-Weight rating, with Morgan Stanley issuing the stock a Neutral rating in a note to clients on Friday.
Goldman Sachs analysts assigned the stock a $40 price target, telling investors that the growth opportunities in pure-play live entertainment assets are priced in.
"While MSG Entertainment's recent spin has created a unique opportunity for investors to gain pure-play exposure to a live entertainment venues business (as well as the favorable secular tailwinds and strong financial model that come along with it), we view valuation at current levels as appropriate given the expected growth profile and capital allocation opportunities of the business relative to comparable companies in the marketplace today," said the analysts.
Morgan Stanley analysts provided a similar tone, assigning a $40 price target on the stock and explaining that while they are bullish on the growth potential in live entertainment, MSGE shares already capture this view.
"We note that the retained 33% interest in MSGE has a pre-tax value of ~$18/SPHR share. Our base case assumes that SPHR will draw down the $65mm delayed draw term loan from MSGE soon and also likely sell some of its MSGE shares to raise more capital to get the Sphere operational," they added.