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Investing.com -- Wolfe Research upgraded Madison Square Garden Entertainment Corp (NYSE:MSGE) to "Outperform" from "Peer Perform" given the undervaluation of stock and strong growth potential in live entertainment business.
Brokerage set its price target to $46 driven by increasing revenues from the Radio City Christmas Spectacular and stable demand at Madison Square Garden.
Madison Square Garden Entertainment trades at 9 times EV/EBITDA with a 10% free cash flow yield for fiscal 2026, which Wolfe sees as too cheap.
The firm expects mid-to-high single-digit growth in adjusted operating income (AOI) over the next few years.
Wolfe believes MSGE’s stock is undervalued due to concerns over macroeconomic conditions and irregular capital allocation. However, with strong pricing power, low financial leverage, and steady event bookings, the firm sees limited downside.
Additionally, with a six- to nine-month booking cycle, MSGE is expected to provide clarity on its 2026 event pipeline by this summer, which could help investors gain confidence in its future earnings.
The Christmas Spectacular accounted for $171 million in revenue last year, about 25% of MSGE’s total sales. Unlike most MSG events, where the company rents venues to third-party promoters, MSGE fully owns and promotes the show, allowing for higher profitability.
Wolfe values MSGE at 15 times 2026 AOI, applying a 30% discount to an intrinsic value of $66. The firm expects double-digit returns, supported by increasing event demand, strong cash flow, and potential debt reduction.
While macroeconomic risks remain, Wolfe sees MSGE as a "permanent winner" in the live entertainment space, benefiting from social media, streaming, and stable industry trends.