Shares of Live Nation Entertainment, Inc. LYV have gained 23.5% in the past year, compared with the industry’s increase of 20.2%. The gain can be primarily attributed to robust global fan demand for live events, resulting in increased ticket sales.
The Zacks Consensus Estimate for the company’s 2024 earnings and sales indicates growth of 1.5% and 8.3% year over year, respectively. However, in the past 30 days, earnings estimates for 2024 have declined 14.7%. Let’s delve deeper.
Growth Catalysts
Live Nation Entertainment’s top-line growth continues to impress investors. The company’s revenues grew to $22.75 billion in 2023, up 36% year over year. The uptrend continued in the first quarter of 2024, with the top line improving 15.5% year over year. The company is capitalizing on growing fan numbers, reflecting strong demand for live events, robust ticket sales and rising prices. Additionally, the strong performance of Ticketmaster and increased fan spending, driven by the world fully reopening post-pandemic, contributed to this growth.
Solid contribution from the Concert segment bodes well. The company is highly optimistic about its growth opportunities in 2024. The company expects to witness improved margins in the Concert segment in 2024, attributable to revenues from beer sales, parking and other revenue streams along with high ticket pricing. Live Nation Entertainment believes that several of its artists, like Drake, among others, will have multi-year tours across the United States and Europe. This, in turn, will drive the company’s performance.
This Zacks Rank #3 (Hold) company’s sponsorship continues to witness robust growth. During 2023, the Sponsorship & Advertising segment revenues totaled $1.1 billion, up 13% from the year-ago figure. The upside was backed by solid U.S. business (with new strategic deals), expanded deals across its ticket access and venue assets, the addition of the new Moody Center arena (in Austin) and new marketing partners in Mexico, including a new banking client that sponsored an inaugural festival and other local events. Given the strength in consumer demand (for the upcoming shows) and confirmed sponsorship activity (fully committed) of over $1 billion in revenues, the momentum is likely to continue in the upcoming periods.
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Concerns
The company witnesses cost hikes due to increased labor-hiring costs, artist activation costs and other operational expenses. Also, it has been witnessing a rise in venue costs and service fees. In the first quarter of 2024, total direct operating expenses were $2.65 billion, up from $2.12 billion in the prior year quarter. The company is cautious of cost overruns related to the development and expansion of live music venues. An increase in costs is likely to affect its bottom line.
Key Picks
Here are some better-ranked stocks from the Consumer Discretionary sector.
Strategic Education, Inc. STRA currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
STRA has a trailing four-quarter earnings surprise of 36.2%, on average. The stock has risen 47.9% in the past year. The Zacks Consensus Estimate for STRA’s 2024 sales and earnings per share (EPS) indicates an increase of 6.4% and 33.3%, respectively, from the year-ago levels.
Netflix, Inc. NFLX presently sports a Zacks Rank of 1. NFLX has a trailing four-quarter earnings surprise of 9.3%, on average. The stock has risen 76.8% in the past year.
The consensus estimate for NFLX’s 2024 sales and EPS implies a rise of 14.8% and 52.2%, respectively, from the year-ago levels.
AMC Entertainment Holdings, Inc. AMC currently carries a Zacks Rank of 2 (Buy). AMC has a trailing four-quarter earnings surprise of 38%, on average. The stock has increased 37.2% in the past month.
The Zacks Consensus Estimate for AMC’s 2024 EPS implies growth of 70.5% from the year-ago level.
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