A Look at Madison Square Garden Entertainment’s Risk Factors

New York-based Madison Square Garden Entertainment (MSGE) operates sport and concert venues. The COVID-19 pandemic dealt a blow to the company’s business as live events stopped.

Let’s take a look at the company’s latest financial performance and risk factors.

Madison’s Fiscal Q4 Results

The company reported revenue of $99.8 million for its Fiscal 2021 Q4 ended June. That compared to revenue of $9 million in the same quarter last year and exceeded consensus estimates of $64.97 million. Adjusted operating loss of $70 million narrowed from $103.5 million in the same quarter last year. Madison completed the acquisition of MSG Networks during Q4. (See Madison stock charts on TipRanks)

For Fiscal 2021, revenue came to $180.4 million compared to $762.9 million in the previous year. The company reported an adjusted operating loss of $271 million compared to an adjusted operating loss of $43.3 million in the previous year. Madison ended the fiscal year with $1.52 billion in cash and $1.74 billion in debt.

Madison’s Risk Factors

The new TipRanks Risk Factors tool reveals 54 risk factors. The company introduced 14 new risk factors across various categories in its Fiscal 2021 annual report.

Madison tells investors that it carries a significant amount of debt. It says that servicing the debt reduces its earnings and cash available for other business purposes. Further, the company cautions that its debt bears variable rates, so its interest expense could increase if interest rates go up.

The company warns that it may not achieve the full anticipated benefits of the MSG Network acquisition. It also tells investors that any delay in integrating the business could adversely impact its operating results and stock price.

In another newly added risk factor, Madison tells investors that it relies on third parties for the programming of its networks. It says it competes with others to acquire programming rights and cautions that such competition may cause it to incur additional costs to retain programming rights, which would adversely impact its financial results.

Finance and Corporate is Madison’s top risk category, accounting for 31% of the total risks. That compares to the sector average of 37%. Madison’s shares have declined about 26% since the beginning of 2021.

Analysts’ Take

Following Madison’s Q4 financial report, Morgan Stanley analyst Benjamin Swinburne reiterated a Sell rating MSGE stock with a price target of $65. Swinburne’s price target suggests 16.74% downside potential. The analyst cited COVID-19 uncertainty and a varying risk profile of Madison’s complex asset portfolio.

Consensus among analysts is a Hold based on 1 Buy, 1 Hold, and 1 Sell. The average Madison price target of $92 implies 17.84% upside potential to current levels.