MSGS
Madison Square Garden Sports Corp.
$353.87
Leveraged Infrastructure
80%
EV/EBITDA × Cable Broadband Multiple
Strong
·
Conviction
Overvalued
Trading 262.8% above fair value
Bear
$0.00
-100.0%
EBITDA $0B × 7.2x − $1B debt
Fair
$97.55
-72.4%
EBITDA $0B × 9.0x − $1B debt
Bull
$0.00
-100.0%
EBITDA $0B × 10.8x − $1B debt
Key Value Driver
EV/EBITDA multiple (9.0x) vs. 135.8× leverage
Implied Market Multiple
1257.0x
Summary
Our base-case estimate uses EV/EBITDA × Cable Broadband Multiple. We then blend that result with the average analyst price target of $390.20 from 29 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $97.55 per share.
Warnings
Debt is 135.8x annual operating profit. Because the company carries so much debt, even small shifts in business value cause big swings in the stock price.
Operating profit only covers interest payments 0.4 times over. If the company needs to refinance at higher rates, it could struggle to service its debt.
We value this business based on total operating profit relative to total enterprise value (debt + equity). Profit-per-share metrics are unreliable when debt makes up most of the company's value.
Wall Street's average price target is $390.20 (from 29 analysts). Our estimate is 100% below the consensus -- consider that gap carefully.
Key Risks
- Debt refinancing at higher rates compresses equity value quickly
- EBITDA flatters — capex, interest, and taxes eat the cash flow
- Cord-cutting and wireless substitution are structural headwinds for cable