Madison Square Garden Entertainment (MSGE) has been designated as Guggenheim’s “Best Idea” for 2025, with strong growth prospects driven by the live entertainment industry’s secular expansion and the potential upside from the planned redevelopment of Penn Station.
Secular Growth and Event Timing Benefits
Guggenheim is optimistic about MSG Entertainment’s growth trajectory, despite recent guidance revisions linked to changes in event timing. The brokerage projects near double-digit adjusted operating income growth for fiscal 2025. While MSGE’s stock has faced a 23% decline since its fiscal first-quarter results, Guggenheim expects a recovery in the latter half of the year, with stronger growth projected for fiscal years 2026 and 2027.
According to Guggenheim, MSGE’s iconic New York City assets, including the legendary Madison Square Garden (The Garden), are particularly well-positioned to capitalize on a rebound in live events. The brokerage emphasized the increasing demand for live entertainment as an ongoing secular growth trend, which MSGE is set to benefit from, especially as restrictions around live events continue to ease.
Stock Repurchase and Potential Developments at Penn Station
Guggenheim also highlighted MSGE’s stock repurchase program as a key factor in boosting shareholder value. The company recently initiated a $25 million buyback, signaling confidence in its future growth prospects.
Further upside could be driven by the redevelopment of Penn Station, which has been a focal point of infrastructure discussions in New York. Reports have suggested that President-elect Trump has engaged with New York Governor Kathy Hochul on potential infrastructure projects, which could include revitalizing the area around Penn Station. MSGE’s assets in the vicinity, including Madison Square Garden and its other venues, are expected to benefit from this development.
Sale of Hulu Theater Could Unlock Additional Value
Guggenheim also mentioned the potential for a significant unlocking of shareholder value through the sale of MSGE’s Hulu Theater, which could be valued at several hundred million dollars. This move would be a major catalyst for MSGE, further boosting its financial position and attractiveness to investors.
Valuation and Price Target
Guggenheim has reiterated its “buy” rating for MSGE, with a $48 price target. This target is based on a sum-of-the-parts valuation that takes into account MSGE’s cash, debt, and corporate costs. The brokerage believes the company is well-positioned for a strong recovery and continued growth in the coming years.
Conclusion
Despite recent challenges, Madison Square Garden Entertainment remains one of Guggenheim’s top picks for 2025. With the live entertainment industry poised for recovery, a robust stock repurchase program, and significant upside potential from the redevelopment of Penn Station, MSGE is well-positioned to deliver strong performance in the years ahead. Investors are encouraged to take note of the company’s growth prospects and its potential for long-term shareholder value creation.
You Might Be Interested In:
