Live Nation Entertainment, Inc. (LYV) shares rose more than 13% during Tuesday's session after Citi upgraded the stock from Sell to Neutral with a price target of $35.00, although that price target reflects a 17% discount to the current market price. Investors are also looking at cues that life is returning to normal in China where COVID-19 first hit.
Analyst Jason Bazinet acknowledges that COVID-19 will adversely affect the entertainment business, but after Live Nation stock fell about 50%, the impact may already be priced into the shares. He believes that the stock is becoming "increasingly attractive" and has enough liquidity to tackle a roughly 90% decline in revenue this year – although the company is estimating only a 70% drop.
The move comes shortly after insiders and billionaire investor Mark Cuban disclosed purchasing shares. CEO Michael Rapino purchased 25,600 shares at $38.98 apiece, and board member Ping Fu picked up $85,000 worth of stock at $42.50 over the past couple of weeks. Mark Cuban said that he has been a buyer of Live Nation as well as Twitter, Inc. (TWTR) in recent weeks.
From a technical standpoint, Live Nation stock continued to rebound from reaction lows made last week. The relative strength index (RSI) rose toward neutral levels with a reading of 42.00, while the moving average convergence divergence (MACD) could see a near-term bullish crossover. These indicators suggest that the stock has more room to run higher.
Traders should watch for a breakout from Fibonacci retracement levels of $42.46 toward the next Fibonacci retracement level of $55.29 over the intermediate term. If the stock fails to break out, traders could see a move lower to retest Fibonacci support levels at $34.53 or lows of around $21.70.
The author holds no position in the stock(s) mentioned except through passively managed index funds.