Stifel Nicolaus & Company analyst Ben Mogil, who upgraded the company’s stock earlier this spring, is retaining his “buy” rating for Live Nation, in part due to the company continuing to post solid concert ticket sales.
In an email to investors this week obtained by TicketNews, Mogil wrote that he remains confident that the company, whose stock trades under the symbol LYV, will reach his shares target price of $13 because not only are ticket sales ahead of this time in 2010, he believes once inside the venue, fans will also spend money.
At about 3:30 p.m. EDT today, June 7, Live Nation’s stock was trading at $10.28, down a little over 1 percent from the previous day’s close of $10.43.
“Since Live Nation reported 1Q11 earnings there continue to be signs that ticket sales are stabilizing and growing moderately,” Mogil said, adding that ticket sales were up 7 percent compared to the same period in 2010.
Last month, Live Nation reported that 2011 was starting out strong, with the company selling more than 34 million tickets during the quarter ended March 31. The company still reported a loss, but the loss was narrower than in the same period in 2010.
Live Nation’s 2010 was a difficult one for the company, as the weak economy negatively impacted the company’s performance, and its industry-shaking merger with Ticketmaster had not yet born fruit.
So in 2011, the company has aggressively sought to grow its Ticketmaster business while reducing the number of shows it will produce this year, and at the same time reduce its upfront payments to many artists.
The moves appear to be slowly paying off for Live Nation, and Mogil said he believes fans will continue to spend money while at concerts. Unlike at amusement parks, for example, where spending is done all in one day, concert tickets are usually purchased in advance, which allows for separate spending while at the show.
“We continue to view in-venue spend as relatively inelastic and with continued signs of ticket volume stabilization, we continue to see a rebound at Live Nation and continue our Buy rating and $13.00 target price,” Mogil said.
He cautioned that while he remains optimistic, there are still risks to investors with Live Nation, such as “1) Ability to obtain the promotional rights for key artists on economically viable terms for concert promotion in major markets. 2) Sponsorship availability 3) Continued ticketing contracts with new venue owners/operators. 4) Renewal of long-term leases Live Nation has for venues which it operates but does not own 5) Accurate assessment of an artists’ appeal in the marketplace. With Live Nation offering financial guarantees or minimums to many of the artists it promotes, a miscalculation in terms of the appeal of an artist can lead to financial losses.”
