Financial Trading Blog
Stock of the day 05/02/2015 – Madison Square Garden Co
2014 was the fourth year in a row that MSG has posted strong gains on the markets; it begun the year at $57.81, and from then on saw near uninterrupted growth. It dipped to a low of $49.73 in May, but recovered its losses and, despite a mid-October dip, reached its 2014 high at the end of that month after a strong Q1 2015 earnings release. That price was $75.76, and since then MSG has only built on this success, opening 2015 at $75.26 before hitting $77.08 ahead of its announcement tomorrow.
Madison Square Garden has had strong revenues in the last 6 quarters, and Q1 2015 was no exception; the company reached $241.7 million compared to the $224.22 million forecast, with a net income of $108.1 million compared to the predicted $84.2 million.
The company has no doubt been helped by the presence of the New York Redbulls, exclusive coverage of New York Giants’ training camp, and the Knicks Summer League; and this is only in sports. Its keystone Madison Square Garden venue in New York remains entrenched in music culture, with recent shows from Jack White and upcoming concerts from Billy Joel and Maroon 5. As well this the venue acts as a mythic target to American comedians, with Aziz Ansari and Louis CK recently becoming the latest in a select few comedians to sell out the Garden.
In fact, the success of the music and comedy side of things prompted the Madison Square Garden Co last October to approve plans split the company into separate entertainment and media/sports entities, in effect creating two companies. This announcement helped MSG reach its October 2014 highs and it will be interesting to see whether there is any expansion on this proposal on Friday, and whether it can prompt the same reaction as it did last year.
Analysts appear to fell that MSG is hovering around its correct valuation, giving a consensus rating of ‘hold’ and an average 12-month target price of $72.98, lower than it is currently trading at. However, another solid quarter and more information on the 2-company split may see MSG ride its wave of positivity higher.
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