When it comes to the stock of concert promoter Live Nation Entertainment , there are two distinct camps: those who think it’s overvalued after a huge climb, and those who think it has much further to run as reopening play.
According to Barron's, T. Rowe Price‘s Justin White is in the latter camp. Although the stock has doubled since White scooped it up last year, he’s hanging on to it and sees more big gains ahead.
“It is a well-positioned business that has a very manageable level of competition,” says White.
The company, which bills itself as the world’s largest provider of live entertainment, was ravaged by the pandemic, which shut down concert tours and venues starting in March of 2020.
One is demand for live concerts as consumers and performers continue to return to their prepandemic ways. White expects the 2022 company’s earnings before interest, taxes, depreciation and amortization to surpass its previous peak of about $940 million in 2019, driven by an increase in concerts and the accompanying revenue. In 2019, Live Nation promoted about 40,000 events — a level that will be hard to reach next year, but the overall trend is positive.
“In 2022, you have not only huge pent-up demand from consumers, but you also have huge pent-up demand from the artists to supply tours to the market,” White says.
Live Nation looks well fortified for any volatility that may like ahead. As of June 30, cash and cash equivalents of about $4 billion. Its net long-term debt totaled about $5.3 billion–nothing to sneeze but certainly manageable. Live Nation is scheduled to discuss its third-quarter results on Thursday during a conference call.
Assuming there isn’t another big resurgence of Covid, the stock has upside of 30% to 50%, as White sees it. “If the [2022] touring season is as good as I think it will be, 50% is possible,” he says.
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