Analyst Benjamin Swinburne of Morgan Stanley maintained a Hold rating on Sphere Entertainment, with a price target of $40.00.
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Benjamin Swinburne has given his Hold rating due to a combination of factors influencing Sphere Entertainment’s current and future performance. While there is an increase in the Sphere segment’s profitability driven by event-related revenues, the overall growth is tempered by the decline in Sphere Experiences revenues. The anticipated sales from the Wizard of Oz show are expected to boost near-term performance, but the need for new intellectual properties remains crucial for sustained growth.
Additionally, the valuation of MSG Networks remains a concern, as its cash flows are insufficient to cover its net debt, and it is unlikely that Sphere will allocate additional funds to address this liability. Despite these challenges, the price target has been raised to $40, reflecting the potential for modest upside, yet the uncertainties surrounding the network’s financial health and the need for new content contribute to the Hold rating.
In another report released yesterday, Bank of America Securities also maintained a Hold rating on the stock with a $48.00 price target.