Wall Street Goes Bearish on Knicks After Durant Injury

Most MSG analysts have "strong buy" ratings

Jun 12, 2019 at 2:52 PM
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The chatter around Kevin Durant's injury in game 5 of the NBA Finals has even made its way to Wall Street, with some attributing the pullback in shares of Madison Square Garden Co (NYSE:MSG) on Tuesday to the Warriors forward's apparent Achilles injury -- since it's long been speculated that Durant will join the Knicks next year. In fact, Durant reportedly could get his own TV show on the MSG Network if he comes to the team.

So when Durant went out of game 5 Monday night with what looked like a serious injury, it resulted in a 1.5% pullback in the stock in Tuesday's trading, and today the shares are slightly lower again, last seen at $287.30, setting them up for a fifth straight loss. Bulls, meanwhile, will be hoping the 200-day moving average acts as support.

msg stock price

Skepticism also picked up in the options pits, where new positions opened at the June 180 put. Anyone buying the contract would be betting on MSG shares moving below the $180 level by the close of Friday, June 21, when the options expire.

At the same time, this just extended a recent bearish streak from Madison Square Garden speculators. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows a 10-day put/call volume ratio of 2.51, which ranks in the 91st annual percentile -- meaning there's been unusual demand for long puts over calls.

On the other hand, analysts have remained mostly bullish, with 80% handing out "strong buy" recommendations. The average price target from this group is $363.34. Taking a broader view, the shares are just slightly higher on a one-year timeline.

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