Some Analysts Just Cut Their Live Nation Entertainment, Inc. (NYSE:LYV) Estimates

Market forces rained on the parade of Live Nation Entertainment, Inc. (NYSE:LYV) shareholders today, when the analysts downgraded their forecasts for this year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative. The stock price has risen 8.1% to US$81.23 over the past week. It will be interesting to see if this downgrade motivates investors to start selling their holdings.

Following the downgrade, the current forecast from Live Nation Entertainment's twelve analysts is for revenues of US$5.2b in 2021, which would reflect a substantial improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 60% to US$3.46. Yet before this consensus update, the analysts had been forecasting revenues of US$5.9b and losses of US$3.50 per share in 2021. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also making no real change to the loss per share numbers.

View our latest analysis for Live Nation Entertainment

The consensus price target was broadly unchanged at US$86.77, implying that the business is performing roughly in line with expectations, despite a downwards adjustment to forecast sales this year. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Live Nation Entertainment, with the most bullish analyst valuing it at US$110 and the most bearish at US$65.00 per share. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. One thing stands out from these estimates, which is that Live Nation Entertainment is forecast to grow faster in the future than it has in the past, with revenues expected to display 11x annualised growth until the end of 2021. If achieved, this would be a much better result than the 6.1% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 16% annually. So it looks like Live Nation Entertainment is expected to grow faster than its competitors, at least for a while.

The Bottom Line

Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Live Nation Entertainment after today.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Live Nation Entertainment's financials, such as recent substantial insider selling. For more information, you can click here to discover this and the 2 other flags we've identified.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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