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Live Nation (LYV) Stock Up 49% in Past Year: More Room to Run?

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Live Nation Entertainment, Inc. (LYV - Free Report) is benefiting from pent-up demand for live events, and robust ticket sales in the United States and the U.K. The company’s shares have surged 49.2% in the past year, compared with the industry’s rally of 35.3%. However, the Delta variant woes and high debt remain concerns.

Growth Drivers

With more than 50% of the United States population fully vaccinated, live music events have returned in the second half of 2021. Recently, the company announced that its U.S. concerts are now fully open. In the United States, demand for festivals like Bonnaroo, Electric Daisy, and Rolling Loud as well as concerts have been robust. On the international front, it is witnessing strong demand. The company is optimistic about its growth opportunity in 2022. Live Nation Entertainment believes several of its artists like Dave Matthews, Luke Bryan, Maroon 5, Travis Scott, Garth Brooks, among others will have multi-year tours across the United States and Europe. This, in turn, will drive the company’s performance. With the pace of vaccination increasing in Europe and Canada, it anticipates more markets to open in coming months.

The coronavirus pandemic has acted as a boon for Ticketmaster. Demand for digital ticketing has increased as venues as well as artists are seeking contactless transactions due to the pandemic. Ticketmaster has added new clients, which represent 11 million net new fee-bearing tickets so far this year. The company anticipates the figure to increase further in 2021. In June, Ticketmaster North America witnessed its fourth best month in history for transacted ticket volume. Ticketmaster will benefit in 2022 from increased Live Nation concert ticket sales and additional sales from new clients.

The Zacks Rank #3 (Hold) company is optimistic about its growth in 2022 and 2023. Robust fan engagement is likely to continue into 2022 and 2023, as arenas, amphitheaters, and stadiums are likely to witness double-digit growth in its show count and ticket sales relative to 2019 levels. Live Nation Entertainment is so confident about its prospects that it is extending its planning into 2023. The company has sold more than 25 million tickets for shows during the second half of 2021. For 2022, it has already sold 14 million tickets, resulting in $2.1 billion of event related deferred revenues.

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Concerns

The Delta variant, which was first found in India, has been rapidly spreading to other parts of the world, increasing the risk of infections. The variant has now been found in 135 countries including the United States. The World Health Organization has warned that Delta will become the globally dominant variant of the coronavirus in the coming months. The Delta variant might hurt the company in the coming months.

Maintaining liquidity has become a herculean task amid the coronavirus pandemic. Although cash and cash equivalent as of Jun 30, 2021, totaled $4,042.6 million compared with $3,018 million as on Mar 31, 2021, debt is still high. Long-term debt at the end of the second quarter was $5,295.2 million, flat year over year. At the end of second-quarter 2021, the company had a debt-to-capital ratio of 1.12, up from the first-quarter 2021 figure of 1.08.

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