Penn Station Redevelopment Trending as Expected w/ Theatre Sale Potential Promising; Reiterate Buy Rating and $86 PT

Research evidence excerpt

Penn Station Redevelopment Trending as Expected w/ Theatre Sale Potential Promising; Reiterate Buy Rating and $86 PT

247.52 247.52 base case has always been the Theater ends up being sold, providing the company

with an upfront cash infusion amounting to what was at the time as much as 15% FY27E EBITDA 282.05 282.05

of the market cap. At this point the debate for many investors looks to be how the Revenue (M)

potential Theater sale proceeds get used. We see various scenarios on investors' minds FY Jun 2025A 2026E 2027EEQUITY

for the use of proceeds including a special dividend (MSGS did a one-time ~$7/share Q1 138.71 158.26A 172.53

special dividend in 2022 so we wouldn't rule it out) or reinvesting proceeds in a high ROI

Q2 407.42 459.94A 498.01 accretive investment project to at least partially optimize for the low-cost tax basis we

presume the Theater has. With the structural growth the live entertainment industry Q3 242.47 246.26A 258.69

is seeing, the proceeds being reinvested in a higher EBITDA contributing venue or asset Q4 154.14 165.15 172.88

compared to the existing Theatre (the existing theater was a very small % contributor) FY REV 942.73 1,029.61 1,102.11RESEARCH

for organic growth purposes could improve both overall corporate EBITDA in 3-5 years FY EV/S 3.7x 3.4x 3.2x

+ point to commanding a higher multiple (MSGE trades ~14x 2027 EBITDA today vs. FY P/S 3.7x 3.4x 3.2x

some comps 17.5x-19.5x). Bottom line: we view MSGE as one of the most compelling

plays in live entertainment as the company leverages its preeminent assets in the MSG EBITDA (Adjusted)

arena and Christmas Spectacular show at Radio City, which both should help support FY Jun 2025A 2026E 2027E

upside revision risk to numbers over the near term (not to mention the upside from Q1 1.91 7.08A 7.05