{"id":329554,"date":"2024-09-04T10:11:50","date_gmt":"2024-09-04T15:11:50","guid":{"rendered":"https:\/\/www.casino.org\/news\/?p=329554"},"modified":"2024-09-04T10:38:54","modified_gmt":"2024-09-04T15:38:54","slug":"sphere-production-costs-scalability-issues-prompt-sell-rating","status":"publish","type":"post","link":"https:\/\/www.casino.org\/news\/sphere-production-costs-scalability-issues-prompt-sell-rating\/","title":{"rendered":"Sphere Production Costs, Scalability Issues Prompt Sell Rating"},"content":{"rendered":"

Citing elevated production costs and issues with expansion, an analyst tagged Sphere Entertainment (NYSE: SPHR) stock with a \u201csell\u201d rating.<\/p>\n

\"Nevada
The Las Vegas Sphere lit up on Halloween. Sphere Entertainment was hit with a sell rating by research firm Benchmark. (Image: WTVM<\/em>)<\/figcaption><\/figure>\n

In a report to clients issued on Tuesday, Benchmark analyst Mike Hickey hit Sphere with the ominous rating and a $40 price target, which implies downside of about 9% from current levels. His bearish call on the Sphere comes in the midst of a pullback that\u2019s seen the stock shed 9.54% over the past week. Still, the shares are higher by 15.9%<\/a> over the past month and 30.55% year to date. Hickey noted there are significant risks to the Sphere investment thesis.<\/p>\n

With only one screen to recoup these significant investments, the financial risk is substantial,\u201d he observed.<\/p><\/blockquote>\n

The Las Vegas entertainment venue got off to a stellar start last year thanks to a series of live U2 concerts, but Sphere Entertainment needs to display proficiency in landing top-tier acts and programming<\/a> to ensure \u201ceconomic viability,\u201d according to Hickey. Besides Benchmark, seven other sell-side firms cover Sphere, with three rating the stock \u201cbuy\u201d or \u201cstrong buy,\u201d and four rating it \u201chold.\u201d<\/p>\n

Don\u2019t Expect More Spheres Soon<\/h2>\n

Las Vegas is arguably the ideal city for the Sphere, which is massive and emits constant light and noise. That\u2019s the case with many venues on the Strip, and while those traits are common in Sin City, they\u2019re not necessarily appealing to other cities.<\/p>\n

\n

London balked<\/a> at a Sphere last year, with mayor Sadiq Khan calling it a \u201cdetriment to human health,\u201d and opposition groups noting such a venue is appropriate for Las Vegas, but not for a town such as Stratford, which was where the company wanted to put its UK sphere. That highlights the scalability challenges facing the operator.<\/p>\n<\/div>\n

\u201cGiven that the original Sphere took five years and $2.3B to construct, rapid expansion seems impractical,\u201d noted Hickey, adding that smaller versions of the Las Vegas Sphere probably aren\u2019t attractive because they would lack appeal due to their diminutive stature, and economic opportunity could be threatened as a result.<\/p>\n

MSG Networks Could Weight on Sphere Stock, Too<\/h2>\n

When Sphere was spun off from Madison Square Entertainment (NYSE: MSGE), regional sports networks<\/a> (RSNs) MSG Networks<\/em> and the YES Network <\/em>were included with the former. That could be problematic because MSG Networks<\/em> has $850 million in debt coming due next month.<\/p>\n

\n

If the RSN can’t refinance that obligation or land an equity infusion from Sphere to pay the tab, <\/em>a default and potential bankruptcy are possible, according to Hickey. Sphere Entertainment investors would likely be irked by the latter option because they\u2019d be diluted to the RSNs.<\/p>\n<\/div>\n

Hickey called Sphere Entertainment essentially an exhibitor business while adding that MSG Networks<\/em> is a debt-ridden entity in a declining industry.<\/p>\n","protected":false},"excerpt":{"rendered":"

Citing elevated production costs and issues with expansion, an analyst tagged Sphere Entertainment (NYSE: SPHR) stock with a \u201csell\u201d rating. In a report to clients issued on Tuesday, Benchmark analyst Mike Hickey hit Sphere with the ominous rating and a $40 price target, which implies downside of about 9% from current levels. His bearish call […]<\/p>\n","protected":false},"author":46,"featured_media":301240,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[3313,10,81886],"tags":[81990,81903,23],"acf":[],"yoast_head":"\nSphere Production Costs, Scalability Issues Prompt Sell Rating<\/title>\n<meta name=\"description\" content=\"Sphere Production Costs, Scalability Issues Prompt Sell Rating.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.casino.org\/news\/sphere-production-costs-scalability-issues-prompt-sell-rating\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Sphere Production Costs, Scalability Issues Prompt Sell Rating\" \/>\n<meta property=\"og:description\" content=\"Sphere Production Costs, Scalability Issues Prompt Sell Rating.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.casino.org\/news\/sphere-production-costs-scalability-issues-prompt-sell-rating\/\" \/>\n<meta property=\"og:site_name\" content=\"Casino.org\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/Casino.OrgNews\" \/>\n<meta property=\"article:published_time\" content=\"2024-09-04T15:11:50+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2024-09-04T15:38:54+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2023\/11\/PGBWFAEOTRBKTKEHEBWSLKFEZE.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"800\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Todd Shriber\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@etfgodfather\" \/>\n<meta name=\"twitter:site\" content=\"@Casino_Org\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Todd Shriber\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.casino.org\/news\/sphere-production-costs-scalability-issues-prompt-sell-rating\/\",\"url\":\"https:\/\/www.casino.org\/news\/sphere-production-costs-scalability-issues-prompt-sell-rating\/\",\"name\":\"Sphere Production Costs, Scalability Issues Prompt Sell Rating\",\"isPartOf\":{\"@id\":\"https:\/\/www.casino.org\/news\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.casino.org\/news\/sphere-production-costs-scalability-issues-prompt-sell-rating\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.casino.org\/news\/sphere-production-costs-scalability-issues-prompt-sell-rating\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2023\/11\/PGBWFAEOTRBKTKEHEBWSLKFEZE.jpg\",\"datePublished\":\"2024-09-04T15:11:50+00:00\",\"dateModified\":\"2024-09-04T15:38:54+00:00\",\"author\":{\"@id\":\"https:\/\/www.casino.org\/news\/#\/schema\/person\/f4cecf70a5032bc4e60eb73fc86d4a85\"},\"description\":\"Sphere Production Costs, Scalability Issues Prompt Sell Rating.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.casino.org\/news\/sphere-production-costs-scalability-issues-prompt-sell-rating\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.casino.org\/news\/sphere-production-costs-scalability-issues-prompt-sell-rating\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.casino.org\/news\/sphere-production-costs-scalability-issues-prompt-sell-rating\/#primaryimage\",\"url\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2023\/11\/PGBWFAEOTRBKTKEHEBWSLKFEZE.jpg\",\"contentUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2023\/11\/PGBWFAEOTRBKTKEHEBWSLKFEZE.jpg\",\"width\":1200,\"height\":800,\"caption\":\"The Las Vegas Sphere lit up on Halloween. 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