Jefferies Initiated Coverage on SFX With a Buy and $16 PT

In a report published Monday, Jefferies analyst Brian Pitz initiated coverage on

with a Buy rating and a $16 price target. Pitz noted that Chairman and CEO Bob Sillerman is joined by a talented and experiences management team, giving confidence to the consolidation of the Electronic Dance Music industry. The analyst commented, "As demand for tickets rises, we see opportunities to expand festivals into new regions, improve profitability of the live-music events, and generate meaningful sponsorship revenue as SFX rolls up a vast audience of millennials (online + festivals), a prized yet elusive demo." Jefferies reported that SFX will have popular festival bands including Tomorrowland and Sensation to the US, Latin America, and Asia. The Pitz further added SFX's unique aspects including high demand for tickets, lower performance costs (compared with rock), low marketing expenses, and the consistency that EDM festivals occur every year. The analyst concluded that, "And with tens / hundreds of millions of online fans plus the ~3.2MM event attendees, we believe SFX has the opportunity to generate meaningful revenue via sponsorship from global brands." SFX Entertainment closed at $8.77 on Friday and is currently trading +3.19%.