Live Nation rises on Citi upgrade, firm gives it 80% chance it stays intact (NYSE:LYV)

Live Nation Entertainment (NYSE:LYV) shares rose early on Monday as Citi upgraded the entertainment company, positing that there is an 80% chance the company is not forced to split into two pending a potential unwinding of the Live Nation-Ticketmaster merger.

Analyst Jason Bazinet moved his rating on Live Nation Entertainment (LYV) to buy from neutral, but lowered the price target to $82. Bazinet noted that if the company stays as is, it’s worth $90 per share, but if it’s forced to split, it’s worth $48 per share.

The analyst noted that Live Nation (LYV) could generate $1.55B in adjusted operating income in 2023, but investors are concerned about that, given recent strength in 2022, potential headwinds, as well as a higher cost of capital, fallout from the inability to meet demand for Taylor Swift’s tickets and the potential fallout from the inquiry by the Department of Justice.

“If the DoJ seeks to unwind the merger – and is successful – we believe: standalone Live Nation would fetch 13.5x EV-EBITDA; standalone Ticketmaster would fetch 8.0x EV-EBITDA; and the firm would incur $100 million of dis-synergies,” Bazinet wrote in a note to clients.

However, Bazinet added that he believes there is only a 20% likelihood that there is a break-up of the firm.

Last week, Senators with antitrust oversight responsibility announced they’ll hold a hearing looking into competition in the live ticketing industry.

Analysts are mostly cautious on Live Nation Entertainment (LYV). It has a HOLD rating from Seeking Alpha authors, while Wall Street analysts also rate it a BUY. On the other hand, Seeking Alpha’s quant system, which consistently beats the market, rates LYV a HOLD.