Live & Touring

Stock Analysts Have Buy Recommendations For SFX Entertainment [SFXE]

Sfx-entertainment-sfxeSince going public in October, SFX Entertainment has struggled a bit in the market but has otherwise continued with their plans to complete acquisitions and pursue more. Such acquisitions support their global ambitions and include many of the most important electronic music festival promoters and their events. Now that their stock, SFXE, has been in play for a bit, stock analysts at various level of the game are weighing in. Here are all the recent acquisitions as well as reactions from analysts.

SFX Entertainment's recent acquisitions include:

Fame House, Tunezy and Arc90

Made Event and the Electric Zoo Festival

Totem OneLove Group and the Stereosonic festival

ID&T including Sensation, Mysteryland, Q-Dance and TomorrowLand

Rock in Rio with events in Rio de Janeiro, Madrid and Lisbon

i-Motion including Nature One, Mayday and Ruhr-in-Love


SFXE Price to Date from Yahoo! Finance


Stock Analysts' Ratings and Target Prices

Since mergers and acquisitions were clearly a key part of their strategy from the beginning, they've likely had less effect on the price of SFXE than such events usually do. However, it should be noted that acquisitions typically bring down the stock price of the acquiring company and that may have had a negative effect on SFXE's price to date given the difficulties of integrating such an array of companies and the possiblity of failed integrations.

By early this month three major companies that analyze and rate stocks began covering SFXE, UBS, Deutsche Bank and Jefferies.

All three currently have Buy ratings with target prices from $15 to $17 per share. SFXE is currently trading above $9 and was at $8.77 when coverage began.

Stifel Nicolaus began coverage of SFXE with a Buy rating and a price target of $14.00.

In the past, analysts' Buy rating were typically interpreted as Holds. Such ratings are problematic for various reasons but they can affect stock prices moving forward especially when institional accounts start getting in on the action but that's a bit further down the road assuming successful progress.

When UBS began coverage Nov. 4, they commented:

"Our Buy thesis is predicated on our belief that the company will 1) benefit from double digit live event organic growth over the next several years as EMC takes greater hold on a global basis, 2) experience gross margin expansion through benefits of scale and efficiencies at live events, as well as the addition of higher margin sponsorship revenue, 3) drive significant sponsorship revenue across its live event and digital platforms, and 4) make accretive acquisitions further expanding its global footprint."

Jefferies raised its target price from $15 to $17 on Monday stating:

"SFX posted a beat for its 1st quarter as a public company with higher-than-expected revenue and EBITDA and selling 900K+ tickets to its EDM shows…The beat suggests the US festival TomorrowWorld was a success, giving confidence other big SFX brands like Mysteryland can cross the pond. SFX also took a 50% stake in mega festival Rock in Rio (undisclosed terms), and we are bringing up our '14, '15 EBITDA by $3 and ~$16MM, respectively."

So it looks like things are off to a reasonably good start based on analyst coverage.

For useful bigger picture coverage that also gives some insight into how traders may be looking at the stock, check out Forbes' Maggie McGrath:

EDM-Obsessed Millennials Boost SFX Entertainment Outlook

And The Street's Antoine Gara:

SFX Entertainment Unveils Earnings Minus Electric Zoo Drug Fiasco


Hypebot Senior Contributor Clyde Smith (Twitter/Facebook) is building a writing hub at Flux Research. To suggest topics about music tech, DIY music biz or music marketing for Hypebot, contact: clyde(at)fluxresearch(dot)com.

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