Sphere's stock climbs after upgrade from J.P. Morgan

By James Rogers

'The Las Vegas Sphere has established itself as a mainstay in the destination tourism market with travelers and artists alike,' analyst says

Shares of Sphere Entertainment Co. were up 4.8% Friday, lifted by the Las Vegas entertainment venue's fourth-quarter results and a J.P. Morgan upgrade.

The stock is on pace to extend its winning streak to five days, its longest since a seven-day streak that ended July 11.

Sphere (SPHR) reported better-than-expected results Wednesday. On Friday, J.P. Morgan upgraded Sphere to overweight from neutral and raised its price target to $57 from $37.

Related: It's time for Sphere shares to 'take a breather' says Seaport, downgrading the entertainment venue's stock

"Three quarters in, the Las Vegas Sphere has established itself as a mainstay in the destination tourism market with travelers and artists alike," J.P. Morgan analyst David Karnovsky said in a note. "Despite some early concern, the operating model has proven out and we expect can improve further as more original content is added and use cases are found for the venue."

He added: "The financials since launch give us further confidence that the company will succeed in signing up international franchise partners, the potential upside from which we do not believe is reflected in the stock price."

Of eight analysts surveyed by FactSet, three have a buy rating and five have a hold rating for Sphere.

Related: Sphere, buoyed by U2's successful residency, spells opportunity, say analysts

In September, U2 kicked off a successful residency at Sphere, which ended in March. Phish played four shows there in April, and Dead & Company completed an extended 30-show residency in early August. The Eagles are slated to begin a 20-show residency in September.

The Sphere Experience, which includes filmmaker Darren Aronofsky's 50-minute immersive film "Postcard from Earth," generated over $1 million in average daily ticket sales on the days it ran during the fiscal fourth quarter, according to Sphere Entertainment.

The venue hosted its first corporate event with Hewlett Packard Enterprise Co. (HPE) in June, as well as the NHL Draft. On Sept. 14, Sphere will host UFC 306, its first live sports event.

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Sphere shares are up 42.6% in 2024, outpacing the S&P 500's SPX gain of 16.4%.

-James Rogers

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08-16-24 1304ET

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