Ticketmaster Entertainment, which has struggled with its stock price after a promising debut in August, is experiencing a significant increase this week in the price of its shares, which trade publicly under the symbol TKTM.
At the close of the market today, December 16, the stock was trading at $6.12 per share, $1.25 above its closing price on Friday, December 12, and approaching twice its value since its low of $3.33 from a few weeks ago. See ticker below.
The rally appears to partially coincide with the news last week that Cheryl Rosner, President and CEO of Ticketmaster’s subsidiary TicketsNow, would be stepping down from her post this Friday. Rosner, who was hired by TicketsNow in the summer of 2007 to boost its value for a sale, was instrumental in achieving that goal when Ticketmaster bought it for $265 million earlier in the year.
Despite the increase, projections on the stock’s future are muted. Earlier today, Mark Mahaney, Director, Internet Research for Citigroup Investment Research, cut his target price for the stock from $9 per share to $6.50, due to the economy and the specter of Live Nation’s pending launch of its own ticketing operation.
“TKTM has shown notable resistance to prior economic slowdowns, but as Q3 results and management comments pointed out, the current global downturn is having an impact on live entertainment spending. While we believe the addition of Front Line is a net positive for TKTM’s competitive offering, we see few near term positive catalysts for the stock, and the Live Nation overhang will likely remain a material issue throughout 2009,” Mahaney wrote to investors.
Citi rates the stock as a “Hold/High Risk,” and believes the company’s level of debt, though manageable, is a concern.
“Excluding roughly $411MM of estimated “client cash” at the end of Q4, we estimate
TKTM will end the year with roughly $665MM in Net Debt or ($11.75 per share). While we are comfortable that the company has the cash-flow strength to support this level of debt (net debt/EBITDA of roughly 2.4x our ’09 EBITDA estimate), the increased debt level does put pressure on the equity valuation in our view,” Mahaney added.
But, Mahaney also praises the experience of President Sean Moriarty, who has been with the company for more than 10 years, and the company’s General Counsel (Ed Weis and Chris Riley have held the position during the period). In addition, Citi believes Ticketmaster’s brand name and position as the dominant player in the ticketing industry also bodes well for the company, as does its TicketsNow subsidiary, which has an in-place infrastructure that allows Ticketmaster to fully compete in the secondary market.
Ticketmaster’s Joe Freeman, Senior Vice President and Associate General Counsel, will be among the speakers at Ticket Summit NYC January 6-8. The three-day conference, the largest in the ticketing industry, is hosted by TicketNetwork, parent company of TicketNews.
(This story was edited at 1pm EST, Wednesday, December 17, 2008 to reflect Joe Freeman’s correct title.)