Tuesday, Live Nation Entertainment's (NYSE:LYV) price target was raised to $130 from $128 by Benchmark, with a continued Buy rating on the stock. The adjustment follows a detailed financial analysis projecting the company's growth through 2028.
Benchmark's approach to setting the new price target for Live Nation involved a discounted cash flow model that correlates with the S&P 500's performance. The model anticipates a 20x normalized Shiller P/E ratio for the company. Projections extend through 2028, culminating in an estimated fair value of $180 in the final forecast year.
The firm expects Live Nation to experience a 6.0% growth in Adjusted Operating Income beyond 2028. This forecast aligns with an estimated 4% sustainable long-term nominal growth rate for S&P 500 earnings, a figure that includes both productivity growth and inflationary effects.
Benchmark's analysis suggests a fair 17.5x multiple on 2024 Adjusted Operating Income (EBITDA) for Live Nation, which is predicted to decrease to 14.1x by 2028 as growth decelerates. This valuation also incorporates a sum-of-the-parts analysis to provide a comprehensive assessment of the company's financial prospects.
InvestingPro Insights
Following the recent update from Benchmark on Live Nation Entertainment (NYSE:LYV), the InvestingPro platform offers additional insights that may interest investors. Live Nation is currently trading at a high earnings multiple with a P/E ratio of 72.18, which is slightly adjusted to 68.83 when looking at the last twelve months as of Q4 2023. This indicates a valuation premium relative to the company's near-term earnings growth, with a PEG ratio of 0.64 for the same period, suggesting potential for future earnings growth relative to the P/E ratio.
Despite a high earnings multiple, analysts on InvestingPro predict the company will be profitable this year, a sentiment supported by the fact that the company has been profitable over the last twelve months. Additionally, Live Nation has shown a strong revenue growth of 36.38% in the last twelve months as of Q4 2023, with a gross profit of $5457.06M and a gross profit margin of 23.99%. This profitability and growth are critical factors that can affect the stock's future performance.
InvestingPro also highlights that Live Nation is a prominent player in the Entertainment industry and has operated with a moderate level of debt, which could be an important consideration for risk-averse investors. However, it's worth noting that the company does not pay a dividend to shareholders, which may influence the investment strategy for those seeking regular income.
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