Madison Square Garden (MSG) is in Overbought Territory: What's Next?

Zacks Equity Research

Madison Square Garden Co (MSG) has moved higher as of late, but there could definitely be trouble on the horizon for this company. That is because MSG is now in overbought territory with an RSI value of 74.51.

What is RSI?

RSI stands for ‘Relative Strength Index’ and it is a popular indicator used by technically focused investors. It compares the average of gains in days that closed up to the average of losses in days that closed down; readings above 70 suggest an asset is overbought, while an RSI below 30 suggests undervalued conditions are present.

Other Factors

Yet MSG’s high RSI value isn’t the only reason for investors to be concerned, as there has been some decidedly negative earnings estimate revisions in Madison Square Garden’s stock as of late. This is especially true when investors dive into some of these revisions in order to get a better picture of MSG’s prospects for the near term.

Over the past two months, investors have witnessed 5 earnings estimate revisions lower compared to just none higher for the current year. The consensus estimate for MSG has also been on a downward trend over the same time period too, as the estimate has fallen from $1.83/share two months ago to just $1.68/share today.

If this wasn’t enough, Madison Square Garden also has a Zacks Rank #5 (Strong Sell) which puts it into unfortunate company among its peers. So, given all of these factors, investors may want to consider exiting this stock now before it falls back to Earth.

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