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MSGE Teams Up With Lenovo: How Should You Play the Stock?

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Madison Square Garden Entertainment (MSGE - Free Report) , part of the MSG Family of Companies, recently announced a partnership deal with Lenovo and its subsidiary Motorola Mobility. 
 
As per terms of the agreement, Lenovo will be an Official Partner of Madison Square Garden, the Christmas Spectacular Starring the Radio City Rockettes, New York Rangers and New York Knicks. Lenovo will also get brand inclusion through MSG Networks. 

Motorola will become an Official Partner of Madison Square Garden, the New York Knicks and New York Rangers.

MSG - Lenovo Partnership Focuses on Small Businesses

The partnership focuses on small businesses and community organizations through programming with both the New York Knicks and the Christmas Spectacular Starring the Radio City Rockettes. 

MSG and Lenovo will collaborate in the Lenovo Evolve Small project to organize a contest in the tri-state area to provide technological upgrades to 10 winning businesses to facilitate their expansion. One of those businesses will acquire $50,000 of advertising across MSG Networks.

Lenovo will give a community partner of Garden of Dreams Foundation, a non-profit organization that collaborates with the MSG Family of Companies, a tour of Radio City Music Hall, a dance class taught by Rockettes and tickets to the Christmas Spectacular.

MSG aims to create value for investors by leveraging brand exposure opportunities through its portfolio of live entertainment offerings.

MSGE Shares Up on Strong Top-Line Growth

MSGE shares have returned 29.8% year to date (YTD), outperforming the broader Zacks Consumer Discretionary Sector’s appreciation of 1.9%

Its shares have also outperformed the Zacks Media Conglomerates industry and peers, including Endeavor Group , Paramount Global (PARA - Free Report) and Lionsgate Studios (LION - Free Report) .

Over the same timeframe, shares of Endeavor have returned 19.1%, while Paramount and Lionsgate dropped 28.7% and 30.4%, respectively. The industry has appreciated 3.5% YTD.

MSGE’s outperformance can be attributed to strong top-line growth. In fiscal 2024, revenues increased 13% over fiscal 2023 to $959.3 million. 

During fiscal 2024, the company hosted more than 6.3 million people during 960 events, reflecting robust growth in events and regular games at The Garden for Knicks and Rangers. 

MSGE sold more than 1 million tickets for 193 shows for the Christmas Spectacular production. It generated roughly $150 million in revenues from the production.

MSGE’s outperformance can be attributed to strong demand for shared in-person experiences, the success of Christmas Spectacular production and an increase in events at MSG venues (increased by a double-digit percentage).

Madison Square Garden’s focus on increasing venue utilization, growth per event profitability, and expansion of sponsorship and premium hospitality businesses are expected to drive its prospects. This, along with robust ongoing demand for its live entertainment offerings, is expected to help MSGE deliver a high single to low double-digit percentage increase in adjusted operating income for fiscal 2025.

Fiscal 2025 Earnings Estimates Steady

For fiscal 2025, the Zacks Consensus Estimate for revenues is pegged at $976.63 million, indicating year-over-year growth of 1.81%. 

The consensus mark for earnings is pegged at $1.64 per share, unchanged over the past 30 days and suggesting a year-over-year decline of 44.78%.

The Zacks Consensus Estimate for third-quarter fiscal 2025 loss is currently pegged at 78 cents per share, unchanged in the past 30 days.  

The consensus mark for third-quarter fiscal 2025 revenues is pegged at $139.05 million, indicating a year-over-year decline of 2.22%.

MSGE Shares - To Buy, Hold or Sell?

Madison Square Garden’s focus on leveraging high-end brand exposure opportunities is expected to drive top-line growth. 

However, MSGE shares are overvalued, as suggested by a Value Score of C.

Stiff competition in the media market is expected to hurt MSGE’s prospects. Incremental selling, general & administrative expenses due to the new office lease are expected to hurt profit in the near term. 

MSGE currently has a Zacks Rank #3 (Hold), which implies that investors should wait for a more favorable entry point to accumulate the stock.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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