MSGE - Madison Square Garden downgraded amid spin-off uncertainty

Madison Square Garden Entertainment ( NYSE: MSGE ) edged lower on Tuesday after Jefferies reduced their rating on the name from Buy to Hold amid “obfuscated” real estate values.

According to the firm’s analysts, the projected spin off of The Sphere and Tao Group from the rest of MSG’s assets obscures the trajectory for the stock. Additionally, an increasingly tough macroeconomic backdrop dampens the prospects for a catalyst that could spark shares higher. As such, investors are best served by staying on the sidelines according to the analysts.

“Our initial positive view on the company was based on the combination of MSG, RCMH, the smaller theatres, The Sphere and Tao, and driven primarily by the inherent real estate value,” equity analyst David Katz wrote. “In the interim, with the expected pressure on the capital markets, there do not appear to be catalysts for re-rating from the present level of ~15X FY24E AOI to higher levels that reflect the inherent value.”

Alongside the downgrade, Katz slashed his price target to $49 from a prior $100. Shares of the New York-based entertainment giant slid about 0.5% in pre-market trading after the downgrade. The stock has marked an over 40% drop year to date.

Read more on the company’s latest earnings release that sent shares to a record low .

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