Here's Why MSG Networks (MSGN) Tumbled in the Wake of an Unfortunate Injury

Here’s Why MSG Networks (MSGN) Tumbled in the Wake of an Unfortunate Injury

Game 5

Game 5 of the NBA Finals took place Monday night in Toronto at Scotiabank Arena. The game was close and the Golden State Warriors were able to slightly edge the Toronto Raptors 106 to 105. The most talked about part of the game was not the final score but the devastating injury Golden State star forward Kevin Durant sustained early in the second quarter. Durant attempted to drive past Toronto Raptor Serge Ibaka as his right leg seemed to give out from under him.

Kevin Durant had to be helped off the court and into the locker room for further evaluation. Monday night’s game was Durant’s first game back from a lower right calf injury on May 8th. Reports indicate that the Golden State warriors expect the MRI Durant was scheduled to undergo should confirm an Achilles tendon tear. An Achilles tendon tear is said to be one of the worst injuries an athlete can have, since typical recovery times range from six months to a full year. Some players in the NBA who suffered an Achilles tendon tear also saw their game performance averages plummet, with some never fully returning to the star they once were.

MSG Networks Feels the Pain

Another injury from Monday night’s game was MSG Networks’ MSGN stock performance. Shares of the entertainment company fell 5% on Tuesday in the wake of Kevin Durant’s injury. Durant was expected to opt out of his current contract with the Warriors, becoming one of the most sought-after free agents of the offseason. The New York Knicks, who play at MSG, were a front runner to sign the NBA superstar, and rumors circulated that New York was one of Durant’s top choices. Many thought that with Durant on the team, he would have boosted ratings for Knicks games, leading to an increase in MSGN stock (MSG Networks broadcasts the majority of Knicks games).

Despite shares falling Tuesday, MSGN has been able to bounce back on Wednesday. MSG Networks is a Zacks Rank #3 (Hold) with a Style Score of A in Value. The company has a forward P/E ratio of 8.17 to go along with an earnings yield of 12.25%. These metrics can assure investors are paying a fair price per share.

The company also has a Zacks Style Score of B in Growth. MSG Networks has an earnings ESP (expected surprise prediction) of 7.14%, which means the company has seen some positive earnings estimate revision activity and has a solid chance to beat earnings in its next report. In addition, the company’s current ratio of 2.56 make it a sound investment with not much risk added.

The New York Knicks also possess the third pick in this year’s NBA draft and plan on signing Duke guard R.J. Barrett, which should help boost ratings and thus sales and earnings for the company. The free agent class this summer is loaded with other NBA superstars that the Knicks can potentially sign, which could help the company’s future growth.

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