Bernstein starts entertainment sector with five Outperform ratings

Bernstein last night initiated coverage of the U.S. entertainment sector with Outperform ratings on Live Nation (LYV), Spotify (SPOT), DraftKings (DKNG), TKO Group (TKO) and Warner Music (WMG), and Market Perform ratings on Liberty Formula One (FWONK) and Flutter Entertainment (FLUT). The firm recommends owning large cap names on the core belief that superfans, the most engaged and price insensitive cohort of content consumers, will be the key driver of growth and profitability in the next phase of the industry. The experience economy will continue to “run hot” as live music and sports venues “scramble to meet seemingly insatiable demand for ultra-luxury VIP packages,” which is great for Live Nation and TKO, the analyst tells investors in a research note. Online, Bernstein believes music service providers will meet strong demand for higher-priced subscription tiers, while high-rolling live bettors, an arena where DraftKings leads, continue to expand their presence within sports betting. The firm says Liberty Formula One and Flutter offer attractive long-term growth prospects but fewer opportunities to “excite to the upside in the near term.”