Although Madison Square Garden Co MSG reported weak FQ4 results, the figures were mostly impacted by “non-cash items and comparability issues,” Loop Capital Markets’ David W. Miller said in a report. He commented that Madison Square Garden was among “the very few equity plays focused completely on live entertainment, which has no secular threat unless there's a recession.”
Analyst Miller maintained a Buy rating on the company, with a price target of $217.
A Look Into The Results
Madison Square Garden reported its quarterly revenues at $217.5 million, down 14.6 percent y/y. Sales at MSG Entertainment were down 9.9 percent y/y, mainly due to the calendar shift on the Spring Spectacular show. Sales at MSG Sports were down 16.8 percent, mostly on account of the New York Rangers exiting the NHL playoffs in the first round this year, Miller mentioned.
MSG recognized a non-cash impairment of $6.9 million due to personnel reorganization. Including the impairment and all items, the company’s GAAP EPS was -$2.39, significantly below the Argus estimate of -$0.84 and consensus expectation of -$1.00.
Spin-co shareholders can “take comfort” in the fact that the new company “is a bet, completely, on live entertainment” and needn’t worry about the issues being faced by the Media sector, since “cord-cutting, cord-shaving, television ratings, and F/X are completely irrelevant to this company,” the analyst pointed out.
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