Sphere Entertainment Co. (NYSE:SPHR) is among the 11 Best Entertainment Stocks to Buy According to Wall Street. Morgan Stanley Raises its Price Target on Sphere Entertainment Co. (SPHR) to $135 and Maintains an Overweight Rating On February 13, 2026, Morgan Stanley raised its price target on Sphere Entertainment Co. (NYSE:SPHR) to $135 from $105 and maintained an Overweight rating, citing stronger-than-expected results from The Wizard of Oz. The firm said the performance lifts its estimates for the Las V ...

Core Insights - Entertainment stocks are gaining attention as investors shift focus from previously dominant sectors, with an emphasis on digital engagement, streaming, gaming, and media platforms [1] - The communication services sector, which includes many entertainment companies, is expected to perform well, driven by advancements in AI and a shift towards high-margin business models [2] Industry Overview - Communication services stocks are projected to be the best-performing sector in 2025, primarily due to the AI trade, with AI expected to be a key driver in 2026 [2] - The sector is experiencing higher margins, reflecting a structural shift towards more efficient business models driven by innovation, scale, and automation [2] Company Highlights - **Live Nation Entertainment, Inc. (NYSE:LYV)**: - Potential upside of 7.41% with 61 hedge fund holders [7] - Price target lowered to $174 from $176 by Roth Capital, maintaining a Buy rating, citing resilience against AI disruption and renewed investor interest due to reduced antitrust concerns [8] - Announced acquisition of ForumNet Group, expected to enhance fan experience and sustainability initiatives [9][10] - **Sphere Entertainment Co. (NYSE:SPHR)**: - Potential upside of 11.50% with 1 hedge fund holder [11] - Price target raised to $135 from $105 by Morgan Stanley, maintaining an Overweight rating due to strong performance from The Wizard of Oz [11] - Reported fourth-quarter revenue of $394.28 million, exceeding consensus estimates, and plans for global expansion [13]

Core Insights - Sphere Entertainment has demonstrated resilience and strong growth despite challenges in Las Vegas, with management aggressively scheduling multiple shows to enhance daily revenue [1][3] - The company reported significant success with The Wizard of Oz, selling over 2.2 million tickets and generating approximately $290 million in ticket sales, contributing to a revenue increase of over 60% in the Sphere segment [2][6][12] Financial Performance - Total company revenues for the December quarter reached $394.3 million, with adjusted operating income of $128 million [11] - Sphere segment revenues were $274.2 million, up more than 60% year-over-year, driven by higher revenues from The Wizard of Oz and increased performances [12] - Sphere segment adjusted operating income was $89.4 million, a significant improvement from an operating loss of approximately $0.8 million in the prior-year quarter [13] Cost Management and Liquidity - The company maintained disciplined cost management, reducing SG&A by $14.9 million year-over-year, with total SG&A at $104.1 million [15][16] - As of December 31, Sphere had approximately $56 million in net debt and $477 million in unrestricted cash, reflecting a solid liquidity position [4][17] Expansion Plans - Sphere is accelerating its expansion with a new 6,000-seat venue planned for National Harbor, supported by approximately $200 million in incentives, with a potential opening in four years or less [5][7] - The company is in the final stages of pre-construction for a venue in Abu Dhabi and is exploring 5-6 projects concurrently [9][10] Sponsorship and Advertising - Sphere has seen strong sponsorship momentum, with partnerships including Google, Delta, and Lenovo, and is actively expanding its roster of official partners [17] - The company hosted its second CES keynote and introduced an interactive game experience in collaboration with LEGO and Lucasfilm's Star Wars [17] Content Pipeline and Residency Outlook - The next Sphere Experience, From the Edge, is expected to be completed later this year, with potential launch timing in the fourth quarter or early next year [19] - The venue is nearly fully booked for concert residencies through 2026, focusing on long weekends to align with Las Vegas market patterns [21]

Management attributes the 60% revenue growth in the Sphere segment primarily to the commercial success of 'The Wizard of Oz', which drove higher per-show revenue and increased performance frequency. The company is shifting toward a global network model, utilizing the Las Vegas venue as a blueprint for expansion into domestic and international markets. Strategic positioning is focused on a 'capital-light' expansion strategy, exemplified by the newly announced 6,000-seat venue in National Harbor, Maryla ...

Financial Data and Key Metrics Changes - For the fourth quarter, the company reported total revenues of $394.3 million and adjusted operating income of $128 million [9] - The Sphere segment generated revenues of $274.2 million, an increase of over 60% compared to the prior year period, driven by higher revenues from the Sphere Experience [9] - Fourth quarter adjusted operating income for the Sphere segment was $89.4 million, compared to an adjusted operating loss of approximately $800,000 in the prior year quarter [10] Business Line Data and Key Metrics Changes - The Sphere Experience saw significant revenue growth due to The Wizard of Oz, with over 2.2 million tickets sold and approximately $290 million in ticket sales [8] - MSG Networks generated $120.1 million in revenues and $38.6 million in adjusted operating income, reflecting a decrease in subscribers and lower affiliate rates [11][12] Market Data and Key Metrics Changes - The company is expanding its presence with a new Sphere venue in National Harbor, Maryland, expected to attract over 15 million annual visitors [5] - The company is in discussions for additional Sphere venues in both domestic and international markets [7] Company Strategy and Development Direction - The company aims to create a global network of Sphere venues powered by proprietary technology and immersive content [5] - Continued investment in immersive technology and experiential content is a priority to maintain leadership in the market [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business model, citing strong ticket sales and positive discussions with IP holders for future projects [5][43] - The company anticipates a strong convention season next year, which will influence show scheduling and revenue growth [28] Other Important Information - The company has secured approximately $200 million in state, local, and private incentives for the National Harbor project, with plans to finalize agreements soon [6] - The company refinanced its credit facility related to Sphere in Las Vegas, extending the maturity and improving borrowing rates [12] Q&A Session Summary Question: How many Sphere expansion projects are expected in the next few years? - Management indicated they could handle 5 to 6 projects simultaneously, assuming they are profitable [15][16] Question: How was the location for National Harbor chosen? - The location was selected due to competitive offers from Virginia and Maryland, which expedited the decision-making process [20][21] Question: How are ticket sales for The Wizard of Oz trending? - Despite seasonal headwinds, ticket sales have been strong, and the company is confident in continued growth [26][28] Question: What is the outlook for SG&A expenses in 2026? - Management is focused on cost-saving opportunities while ensuring infrastructure supports growth, with fluctuations expected in SG&A expenses [31][32] Question: What is the status of the residency pipeline through 2027? - The company is nearly fully booked for 2026 and has limited availability for 2027, focusing on long weekends to maximize attendance [46][47] Question: Can you provide an update on the sponsorship strategy? - The company has secured partnerships with brands like Delta and Anheuser-Busch and is actively pursuing additional sponsorship opportunities [52][55]

Financial Data and Key Metrics Changes - For Q4 2025, the company reported total revenues of $394.3 million and adjusted operating income of $128 million [8] - The Sphere segment generated revenues of $274.2 million, an increase of over 60% compared to the prior year period, driven by higher revenues from the Sphere Experience [8] - Adjusted operating income for the Sphere segment was $89.4 million, compared to an adjusted operating loss of approximately $800,000 in the prior year quarter [9] Business Line Data and Key Metrics Changes - The Sphere Experience saw significant revenue growth due to The Wizard of Oz, with over 2.2 million tickets sold and approximately $290 million in ticket sales [6] - MSG Networks generated $120.1 million in revenues and $38.6 million in adjusted operating income, reflecting a decrease in subscribers and lower affiliate rates [10][11] Market Data and Key Metrics Changes - The company is expanding its presence with a new Sphere venue in National Harbor, Maryland, expected to attract over 15 million annual visitors [4] - The company is in discussions for additional Sphere projects in both domestic and international markets [5] Company Strategy and Development Direction - The company aims to create a global network of Sphere venues powered by proprietary technology and immersive content [4] - Continued investment in immersive technology and experiential content is planned to maintain Sphere's leadership position [5] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business model and the potential for substantial long-term growth, particularly with the expansion of Sphere venues [6] - The company is optimistic about ticket sales and demand for The Wizard of Oz, even during traditionally weaker periods in Las Vegas [28] Other Important Information - The company has refinanced its credit facility related to Sphere in Las Vegas, extending the maturity for a new five-year term and improving the borrowing rate [11] - The company is actively pursuing partnerships with various brands for sponsorship opportunities, including recent deals with Delta and Anheuser-Busch [56] Q&A Session Summary Question: How many sphere expansion projects are expected in the next few years? - Management indicated they could handle 5 to 6 projects simultaneously, assuming they are profitable [14][15] Question: Have elevated construction costs impacted conversations with potential partners? - Management stated that the business model still supports the investment level, and they are exploring new construction methods to lower costs [16] Question: Can you provide more details on the National Harbor location selection? - The location was chosen due to a competitive offer and favorable dynamics in the area [20] Question: How are ticket sales for The Wizard of Oz trending? - Management noted strong growth despite seasonal headwinds and is confident in future demand [28] Question: What is the outlook for SG&A expenses in 2026? - Management emphasized a focus on cost-saving opportunities while ensuring infrastructure supports growth [31] Question: Can you provide an update on the residency pipeline through 2027? - The company is nearly fully booked for 2026 and is focused on long weekends to maximize attendance [47] Question: What is the status of the sponsorship strategy and Exosphere progress? - The company reported strong growth in sponsorships and debuted an interactive game experience, indicating positive momentum [56]

Core Viewpoint - Netflix stock has shown significant growth, more than doubling in value over the past five years, despite challenges in the 2022 bear market [1] Group 1: Company Performance - Netflix currently has over 300 million subscribers, solidifying its dominance in the streaming industry [2] - The stock is trading at a forward price-to-earnings multiple of 31 based on next year's consensus earnings estimate, with projected earnings per share growth of 24% annually over the next several years [4] - The company has substantial untapped growth opportunities, capturing only 10% of TV viewing time in its largest market, indicating potential for increased engagement and revenue growth [5] Group 2: Strategic Moves - Netflix is pursuing the acquisition of Warner Bros. Discovery for a total enterprise value of $83 billion, which is expected to enhance its content library significantly [2][8] - The acquisition will include popular franchises such as The Wizard of Oz, Harry Potter, and Game of Thrones, positioning Netflix for even greater success in the entertainment industry [5] Group 3: Investment Outlook - Analysts believe that if Netflix meets its earnings growth expectations, the stock could potentially double within three years [4] - Investors who hold Netflix stock for the next five years are expected to see market-beating returns due to the stock's attractive valuation relative to its growth potential [6]

Core Viewpoint - The proposed $72 billion acquisition of Warner Bros. Discovery by Netflix faces skepticism from the Trump administration, raising concerns about regulatory approval and potential antitrust issues [1][5][10]. Company and Industry Summary - Netflix's acquisition of Warner Bros. Discovery would significantly enhance its content library, adding popular franchises and shows such as "The Big Bang Theory," "Game of Thrones," and the DC Universe [11][14]. - Paramount Skydance has made multiple bids to acquire Warner Bros. Discovery entirely, with a final offer pricing shares at $30 each, indicating competitive interest in the company [2][5]. - The deal has drawn criticism from various stakeholders, including Senator Elizabeth Warren, who argues it could create a media monopoly, leading to higher prices and fewer choices for consumers [9][10]. - The Writers Guild of America has also opposed the merger, stating it would harm jobs and wages in the entertainment industry, emphasizing that antitrust laws are designed to prevent such consolidations [10]. - Netflix's leadership argues that the merger would provide greater value and choice for consumers, enhance the creative community, and strengthen the entertainment industry overall [17]. - The transaction is expected to close after Warner Bros. Discovery separates its streaming and studio divisions into two publicly traded companies, anticipated to be completed in the latter half of 2026 [18].

Core Points - Netflix has agreed to acquire Warner Bros. Discovery in a deal valued at $72 billion, which includes the acquisition of film and television studios as well as the HBO Max streaming platform [1][2] - The deal is structured as a cash-and-stock transaction, with a valuation of $27.75 per share for Warner Bros. Discovery and an enterprise value of $82.7 billion [2] - Netflix co-CEO Greg Peters emphasized that this acquisition will enhance Netflix's offerings and accelerate its business growth for decades, highlighting Warner Bros.'s historical significance in the entertainment industry [2] Company Summary - The acquisition will add significant franchises and content to Netflix's portfolio, including popular shows and movies such as "The Big Bang Theory," "The Sopranos," "Game of Thrones," "The Wizard of Oz," and the DC Universe [1] - The strategic move is expected to strengthen Netflix's competitive position in the streaming market by expanding its content library and production capabilities [2]

Core Insights - Warner Bros is set to release a new version of "Harry Potter and the Sorcerer's Stone" in partnership with Cosm, scheduled for 2026, with ticket sales beginning in early 2026 [1][2] - The new film versions utilize Cosm's advanced technology, featuring an 87-foot diameter screen with over 12K resolution, aiming to create an immersive experience for audiences [2] - Cosm's flagship location is in Los Angeles, with additional sites in Dallas and a forthcoming location in Cleveland, OH [3] Industry Context - Recent Cosm releases include "The Matrix" and "Willy Wonka & the Chocolate Factory," indicating a trend towards immersive cinematic experiences [2] - A similar venture in Las Vegas featuring "The Wizard of Oz" has achieved significant success, selling over 1 million tickets and generating $130 million in revenue since its debut [4] - The movie industry is adapting to a challenging market environment post-COVID, with innovative models like those from Cosm and Sphere gaining attention from studios and stakeholders [4][5] Company Statements - Cosm's CEO, Jeb Terry, emphasized the company's mission to enhance the movie-going experience and create immersive environments for fans [6] - Warner Bros. Pictures' global distribution chief, Jeff Goldstein, highlighted the partnership with Cosm as a way to redefine cinematic experiences and celebrate the Warner Bros. film library [7]