MSG Entertainment Trading at ‘Huge’ Discount, The Edge Says

Investors should buy shares of the newly spun-off Madison Square Garden Entertainment, which is currently trading at “a huge 60% discount to its net asset-based valuation,” according to The Edge Consulting Group.

Considering MSGE’s expected net cash balance of $1.3b after the sale of The Forum by the end of the current quarter, the market seems to be assigning just $300m to its assets, The Edge said in a note to clients. The research firm expects MSGE to have a “manageable debt load” of $120m post-FY22.

Meanwhile, Madison Square Garden Sports (MSGS) is trading at a 25% discount to the value of its Knicks and Rangers sports teams, and The Edge sees “room to reduce this valuation gap in the next year when things likely become normalized after the current coronavirus-related league suspension”

-Note on Bloomberg by Drew Singer