JP Morgan analysts upgraded their rating on Sphere Entertainment (New York Stock Exchange:SPHR) to “overweight” from “neutral” after gaining confidence in the company's operating model despite initial skepticism.
The research firm said that since opening its doors to the public, the company's finances indicated that it will be able to secure international franchise partners and believes that the upside potential this implies is not reflected in the share price. JPM believes that Sphere could substantially reduce selling, general and administrative expenses and limit the fall in the shares.
“Three quarters in, Las Vegas Sphere has established itself as a mainstay in the destination tourism market, among both travelers and artists. Despite some initial concerns, the operating model has proven effective and we expect it can improve further as more original content is added and use cases are found for the venue,” the research firm said in its Aug. 16 note.
For the first quarter, JPM now expects SPHR's overall revenue to be $249 million, up from $250 million in prior revenue. SA's consensus estimate for first-quarter revenue is $245.4 million.
SPHR has a PT of $57, which implies a 23% increaseThe company's shares are +5% by Friday afternoon. Stock is +42% so far this year at the close on Thursday, while the benchmark S&P index rose by 16%.
