Sphere Entertainment, the Communication Services sector company, was revisited by a Wall Street analyst today. Analyst Peter Henderson from Bank of America Securities reiterated a Hold rating on the stock and has a $95.00 price target.
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Peter Henderson has given his Hold rating due to a combination of factors that balance Sphere Entertainment’s improving fundamentals against its recent share price strength. He recognizes that the company has successfully transitioned from a novel, unproven concept to a solid entertainment platform, largely driven by the strong performance of the “Wizard of Oz” production, which has generated significant ticket sales and demonstrated that well-known intellectual property can support sustained demand. He also acknowledges that this success underpins a more credible long-term growth story, including the potential for additional venues and a franchise model, and it justifies a higher valuation multiple for the Sphere segment. However, he notes that much of this improved outlook already appears reflected in the current stock price, as investors seem to be assuming limited deterioration in “Wizard of Oz” demand and successful expansion into new markets.
Henderson’s valuation work, based on a sum-of-the-parts approach with an increased multiple for the Sphere segment and a conservative multiple for MSG Networks, leads to a price objective only modestly above the current share price, which constrains upside. His updated forecasts show sizable growth in revenue and adjusted operating income over the next two years, particularly at the Sphere segment, but he views the risk-reward as balanced given execution risks around new Spheres, reliance on continued strong show performance, and the already elevated trading range of the stock. As a result, despite a higher price target and improved visibility into the business model, he concludes that the shares are fairly valued at present and thus merit a Neutral (Hold) recommendation rather than a more aggressive stance.
According to TipRanks, Henderson is ranked #4162 out of 10143 analysts.