Bernstein SocGen initiates TKO Group stock with outperform rating

On Wednesday, Bernstein SocGen Group initiated coverage on TKO Group Holdings (NYSE: TKO), assigning an Outperform rating and setting a price target of $190, representing a 17% upside from current levels. According to InvestingPro data, TKO’s stock has already delivered an impressive 52% return over the past year. Analysts at Bernstein SocGen highlighted TKO Group’s strong position in combat sports intellectual property and noted its potential for growth through various avenues.

The analysts see TKO Group as a promising investment in live sports entertainment, expecting the company to show sustained growth. Supporting this outlook, InvestingPro data shows TKO achieved a 10% revenue growth in the last twelve months, with $2.85 billion in revenue and a robust 70% gross profit margin. They anticipate the renewal of UFC rights to exceed $1 billion annually, alongside continued growth in live events and sponsorships, leading to segment EBITDA growth, which currently stands at $730 million.

The transformation within WWE is expected to drive efficiency and cost savings, contributing to margin expansion. With a current ratio of 1.25 and moderate debt levels, TKO maintains strong financial flexibility for its growth initiatives. Recent acquisitions by Endeavor are also seen as enhancing TKO’s long-term growth prospects, particularly with exposure to major events like the FIFA World Cup and the Olympics.

TKO’s strategy to enhance its live events, including the Kansas City Takeover in April, demonstrates its ability to attract audiences and capitalize on site fees. Bernstein SocGen’s valuation methodology implies a 30x multiple for TKO, which is below expectations, but they believe consensus estimates do not fully reflect the impact of recent acquisitions.

In conclusion, Bernstein SocGen’s analysts believe TKO Group is well-positioned for growth, with multiple factors contributing to its positive outlook.

In other recent news, TKO Group Holdings has reported its first-quarter 2025 earnings, surpassing analyst expectations with an earnings per share of $0.69, compared to the forecast of $0.57. The company also exceeded revenue forecasts, reporting $1.27 billion against the anticipated $703.74 million. TKO Group has raised its full-year 2025 guidance, now targeting revenue between $4.49 billion and $4.56 billion, with an adjusted EBITDA range of $1.49 billion to $1.53 billion. Additionally, TKO has declared a quarterly cash dividend of $0.38 per share, totaling approximately $75 million, payable on June 30, 2025. In terms of analyst activity, TD Cowen recently increased its price target for TKO Group to $220 from $200, citing expected earnings and cash flow growth from newly acquired assets. Benchmark analysts maintained a Hold rating on TKO Group, noting that while the company’s core segments showed uneven organic growth, recent acquisitions boosted overall performance. These developments indicate significant financial activity and strategic moves for TKO Group Holdings in the recent period.

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