MSG Hits 52-Week High on Maxim Rating
NEW YORK (
) --
Madison Square Garden
(MSG) - Get Report
shares hit a new 52-week high of $23.80 today after Maxim Group initiated coverage on the entertainment company yesterday with a buy rating and a price target of $29.
John Tinker, an analyst with Maxim Group, said that while many investors underestimate the potential of the stock, he is looking past low expectations and focusing on the probability of a recovery in the advertising market and the overall economy. He anticipates a growth in sponsorship revenue as well as an improvement in sports teams' performance.
The Manhattan-based sports arena is currently undergoing renovation, which Tinker says could produce better-than-expected financial numbers. The company expects to spend around $800 million on the construction, which won't be completed until 2013.
MSG, which spun off of
Cablevision Systems
(CVC)
in February 2010, owns the right to broadcast New York professional sports teams including the Knicks, Rangers, Islanders and Devils.
The company saw its third-quarter earnings almost double, driven by improved revenue at its entertainment and media segments. Earnings came in at 25 cents per diluted share, ahead of analyst estimates of 15 cents.
Revenue from its media segment rose 17.4% to $133.4 million from $113.6 million due to an $18.7 million increase in affiliate fee revenue, and a $1.1 million increase in advertising revenue. Entertainment revenue rose 24.8% due to a gain in event related revenue at the Madison Square Garden arena.
Madison Square Garden shares were up more than 4% in early morning trading, and were up about 2.9%, to $23.60, approaching noon.
-- Written by Theresa McCabe in Boston.
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