Evercore: It's Time To Get In Line For Live Nation

Live Nation Entertainment, Inc. LYV is slowly recovering from an earnings-related selloff. Its poor third-quarter performance disappointed many, but at least one analyst is ready to move forward.

The Analyst

Evercore ISI analyst David Joyce upgraded Live Nation from In Line to Outperform and maintained a $73 price target.

The Thesis

Evercore expects Live Nation’s Ocesa transactions to drive double-digit growth in adjusted operating income next year, Joyce said in a Monday upgrade note. (See his track record here.)

By 2023, the company is forecast to bag $1.5 billion in adjusted operating income, the analyst said. Given those prospects, Joyce is advising investors to capitalize on Live Nation’s recent pullback.

“We think Live Nation Entertainment shares have pulled back needlessly post-3Q19 report,” he said. “It seems that the 3Q19 revenue miss (due to light stadium activity, which was misunderstood due to its outsized revenue contributions) despite the AOI beat, led to the sell activity in LYV shares.”

The optimism was bolstered by the quarterly earnings call, when management assured investors of no challenges to growth, Joyce said. 

“We do not think it is a sign that they have pulled forward potential 1Q20 bookings activity,” the analyst said. 

“We think that the industry’s 3-year cycle should bring large stadium events back into growth mode – these require greater lead time in scheduling, booking, and marketing – as one of the bookings growth factors.”

Evercore considers concerts recession-resilient and expects growth to be driven by both small venues and high-revenue stadium concerts.

Price Action

Live Nation shares were trading 0.64% higher at $64.88 at the time of publication Tuesday. 

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