Benchmark stays bullish on Live Nation as lawmakers keep up ticket scrutiny
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Benchmark is sticking with a Buy rating on Live Nation Entertainment (NYSE:LYV) even in the wake of a new bipartisan House bill aimed at reforming live event ticketing fees in the United States.
House Reps. Jan Schakowsky (D.-Ill.) and Gus Bilirakis (R-Fla.) introduced the TICKET Act, which aims for event ticketing to mirror advertising guidelines for airline tickets, requiring sellers to display the full ticket price (fees included) in any promotional material.
The House bill is a companion to a similar measure introduced in the Senate in April. The impetus for the action is the fact that studies show fees can add anywhere from 21%-58% to the total cost of tickets -- as well as recent well-publicized Ticketmaster ticketing fiascos for concerts by superstar performers from Beyoncé to Taylor Swift.
But "the bill is supportive of the reforms Live Nation (LYV) is seeking and delineated in its FAIR Act proposal," Benchmark analyst Matthew Harrigan said, reiterating a Buy rating. "Passage of the Act, with some measures paralleling successful all-in pricing approaches in certain European countries, could significantly defuse the ticket fee cloud."
In the first quarter, secondary-market prices were near double that in the primary market, showing just how much live events are underpriced even including the controversial fees, Harrigan said. Meanwhile, secondary activity made up a "mid-teen percentage" of Live Nation's first-quarter gross transaction value, suggesting that "Live Nation should not be the villain relative to peers for disturbances such as the massive premiums for Taylor Swift’s 2023 Eras Tour."
He's also "particularly enthused" about international expansion, one of "myriad" potential growth vectors.
A $110 price target implies 31% upside, and Live Nation's current trading price implies a 60% discount on fair Ticketmaster value, Harrigan said.