Saturday, June 12

Things Look Grim For Live Nation Entertainment, Inc. (NYSE:LYV) After Today’s Downgrade


The analysts covering Live Nation Entertainment, Inc. (NYSE:LYV) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.

After this downgrade, Live Nation Entertainment’s twelve analysts are now forecasting revenues of US$6.4b in 2021. This would be a major 246% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 59% to US$3.29. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$7.3b and losses of US$1.96 per share in 2021. So there’s been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.

View our latest analysis for Live Nation Entertainment

NYSE:LYV Earnings and Revenue Growth March 6th 2021

The consensus price target lifted 10% to US$81.82, clearly signalling that the weaker revenue and EPS outlook are not expected to weigh on the stock over the longer term. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company’s valuation. Currently, the most bullish analyst values Live Nation Entertainment at US$100.00 per share, while the most bearish prices it at US$50.00. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. For example, we noticed that Live Nation Entertainment’s rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 246% growth to the end of 2021 on an annualised basis. That is well above its historical decline of 0.09% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 15% per year. So it looks like Live Nation Entertainment is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for this year. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. The rising price target is a puzzle, but still – with a serious cut to this year’s outlook, we wouldn’t be surprised if investors were a bit wary of Live Nation Entertainment.

Still, the long-term prospects of the business are much more relevant than next year’s earnings. We have estimates – from multiple Live Nation Entertainment analysts – going out to 2025, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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