In a report released today, Benjamin Swinburne from Morgan Stanley maintained a Hold rating on Madison Square Garden Sports (MSGS – Research Report), with a price target of $235.00.
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Benjamin Swinburne’s rating is based on several considerations. Firstly, despite Madison Square Garden Sports (MSGS) trading at a notable discount to the private market values of NBA and NHL franchises, Swinburne does not foresee any immediate catalyst that could close this gap. The local media rights for the Knicks and Rangers, established in 2015 before the cord-cutting era, have become unsustainable, and MSG Networks has suggested a reduction in these fees.
Moreover, Swinburne notes that although MSGS shares trade at approximately a 50% discount to their private market value, thereby limiting downside risk, the company’s financials are expected to face pressure. With a projected 50% cut in rights fees by fiscal year 2026, the financial performance is likely to be modestly free cash flow positive. As a result, Swinburne has adjusted the price target and bear case assumptions, recognizing potential free cash flow challenges that could weigh on the stock.