Investment bank Goldman Sachs this week gave Live Nation Entertainment a “neutral” rating and expects the ticketing and concert giant’s stock price could reach $12.50 per share in the next six months.
As of today, December 7, the stock, which trades under the symbol LYV, was priced at $11.49 per share at 1:45 p.m. EST, which was down from the day’s opening price of $11.82. But, on December 7, 2009, the stock closed at $7.72 per share, a nearly 49 percent increase over the course of the year.
“We see both content and the economic cycle impacting attendance in North America and believe that Live Nation shares should act positively through the early part of next year as we see some of the biggest acts in the touring business return within the context of a more stable economy,” wrote Ingrid Chung, equity research analyst for Goldman Sachs, in a note to investors this week.
In addition, Chung sees Live Nation’s international expansion plans as another positive for the company, which currently generates nearly 30 percent of its revenues from overseas markets. International sales will continue to rise as the global economy picks up and the growing middle class around the world looks for ways to entertain themselves with their increasing income.
With 2010 winding to a close, the Goldman Sachs rating is good news for Live Nation, which suffered a rollercoaster year due to several tours either underperforming, or being canceled, due to the still recovering economy. The company’s stock price had skyrocketed to nearly $17 per share in the spring, but it fell off dramatically as the company’s touring woes began to pile up by the summer.
In fact, Chung cautioned investors that while the stock may continue to rally in the early part of the year, Goldman Sachs still has some concerns for the future. Last week, Standard & Poor’s lowered its rating of Live Nation to “stable,” in part on concerns about the company’s debt and an underwhelming third quarter, ended September 30.
According to Chung, the “supply” of concerts grew 17 percent each year between 2000 and 2007, as an increasing number of acts hit the road to make up for diminished revenues from slowing record sales. Yet, attendance only grew at 6 percent during that period, and concertgoers began to creep up in age.
“However, on a longer-term basis, we are concerned that the top tier acts could be appealing to an increasingly ‘mature’ audience – more than 2/3rds of the industry revenue generated in 2009 came from acts with an average age over 45 and we have seen a significant fall-off in concert attendance by 12-24 year-olds,” Chung wrote.