LOS ANGELES (CelebrityAccess) Shares of Live Nation Entertainment (LYV) dropped 2.1 percent in premarket trading on Friday, and closed down 1.02 percent, after Citi Research analyst Jason Bazinet downgraded the stock to sell from neutral.
This is not the end of the world: There will always be analysts, for every stock watched, that will be pessimistic while others are bullish. However, this is a bit of an anomaly for LYV, which has seen strong support from analysts and has risen in 52 weeks from approximately $46 to $67. This year alone, the stock has risen a phenomenal 36 percent, which is better than this year’s Wall Street darling, Microsoft. But even though it may be one voice, that voice represents the Private Bank of Citibank.
“We like Live Nation’s growth prospects and consistent operating performance,” Bazinet said. “However, we fear that investors have either become too willing to pay a premium for growth…or investors are making some valuation mistakes to arrive at the prevailing equity value.”
Bazinet argued that Live Nation shares are difficult to value on a multiple of enterprise value to EBITDA because of a large portion of the company’s cash balance that doesn’t belong to shareholders, accounting changes that have placed $1.2 billion in operating leases on the balance sheet, and other factors.
Bazinet held on to a $63 target.