What's Down: T4F Entretenimento's plunge from the world's most expensive concert promoter to one of the cheapest has analysts predicting a rebound.
Time for fun over after Madonna concert flop
T4F Entretenimento's plunge from the world's most expensive concert promoter to one of the cheapest has analysts predicting a rebound.
All six analysts who rate the company known as Time 4 Fun reiterated or raised their ratings to the equivalent of a "buy" since mid-last month, data compiled by Bloomberg shows.
Time 4 Fun said it had traded at 10.8 times estimated 2013 earnings as of last week, the cheapest among global peers after Germany's DEAG Deutsche Entertainment and South Korea's SM Entertainment. Based on this year's profit, the stock had the industry's highest ratio at 43.
Time 4 Fun plunged 58 per cent since the beginning of September after the Brazilian billionaire Eike Batista's entertainment venture IMX Arts lured away one of its headline shows and weak demand for concerts from Madonna to Lady Gaga forced the promoter to sell tickets at a discount.
Demand for live events will rise as growth picks up in Brazil, the world's second-largest emerging economy, according to Bruno Piacentini, a partner at Fama Investimentos.
"It's definitely worth more," said Mr Piacentini "The market move was due to one-time events rather than the company losing value." The stock sell-off was triggered by the September 25 announcement that IMX, a partnership between Mr Batista's EBX Group and IMG Worldwide, will promote Cirque du Soleil events in South America.
The deal was a blow to Time 4 Fun, the previous promoter of the Canadian acrobatic show, which was its biggest draw among regularly scheduled offerings.
The company's troubles were compounded by the back-to-back disappointing sales for Lady Gaga's show last month and Madonna this month, each of which were expected to lure as many as 90,000 concertgoers.
"Weaker demand from the public caused ticket sales to miss expectations and that, combined with rising costs due to inflation and mostly the weaker real, led to financial losses for recent concerts," Joao Costa Marques, a partner at the investment fund PrismaInvest in Rio de Janeiro said.
The announcement prompted analysts to cut the average 12-month price target to 10.48 Brazilian reals a share, down from 17.67 reais a few days earlier, data compiled by Bloomberg shows.
Time 4 Fun's press office declined to comment for this story. An email sent to a Lady Gaga representative was not immediately returned.
Madonna's MDNA tour was "one of the top 10 hours in history", said Arthur Fogel, the chairman of Live Nation Entertainment's global music division, the tour's international promoter.
* Bloomberg News