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Madison Square Garden Entertainment: Are its Assets Fairly Priced?

An overview of financial analysts' perspectives on the valuation of Madison Square Garden Entertainment Corp.

Madison Square Garden
Madison Square Garden

Goldman Sachs and Morgan Stanley Weigh in on MSGE

In recent developments, Goldman Sachs initiated Madison Square Garden Entertainment Corp (NYSE: MSGE) with an Equal-Weight rating. Simultaneously, Morgan Stanley issued the stock a Neutral rating in a report to clients on Friday. Both firms believe the stock's current price accurately reflects its inherent value.

Understanding the $40 Price Target for MSGE

The analysts at Goldman Sachs set a price target of $40 for MSGE's stock. They informed investors that the growth prospects of the company's pure-play live entertainment assets had been adequately factored into the price. These analysts also pointed out the unique opportunity offered by MSG Entertainment's recent spin.

Weighing the Value Proposition of MSG Entertainment

The Goldman Sachs team elaborated, "While MSG Entertainment's recent spin has created a unique opportunity for investors to gain pure-play exposure to a live entertainment venues business (as well as the favorable secular tailwinds and strong financial model that come along with it), we view valuation at current levels as appropriate given the expected growth profile and capital allocation opportunities of the business relative to comparable companies in the marketplace today."

Morgan Stanley Echoes Goldman Sachs' Views

Analysts at Morgan Stanley also held a similar stance, setting the same $40 price target on MSGE shares. They expressed optimism about the growth potential of live entertainment but pointed out that the current price of MSGE shares accurately captures this outlook.

Analyzing MSGE's Financial Strategy

The Morgan Stanley team noted, "The retained 33% interest in MSGE has a pre-tax value of ~$18/SPHR share. Our base case assumes that SPHR will draw down the $65mm delayed draw term loan from MSGE soon and likely sell some of its MSGE shares to raise more capital to get the Sphere operational." They highlighted the company's strategic financial moves to raise more capital for its ongoing projects.