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On Tuesday, Jefferies analyst Randal Konik increased the price target for TKO Group Holdings (NYSE: TKO) to $220 from the previous $200, while maintaining a Buy rating on the company’s shares. The adjustment reflects the analyst’s positive outlook on the Ultimate Fighting Championship’s (UFC) upcoming media rights deal, which is expected to draw significant interest due to the high demand for live sports content. InvestingPro data shows TKO has delivered an impressive 74.81% return over the past year, with a current market capitalization of $24.33 billion.
Konik pointed out that the UFC’s ’26 media rights deal is central to investors’ attention, as the organization is likely to secure a substantial premium based on its global appeal and increasing fan base. The analyst predicts the deal could be valued at 1.8 times the current Average Annual Value (AAV) of $500 million, potentially providing a $300 million EBITDA boost in fiscal year 2026. This estimate, according to Konik, might be on the conservative side, especially considering that sports rights deals in ’24 were averaging 2.7 times the prior AAV. The company’s current EBITDA stands at $675.74 million, with a robust gross profit margin of 67.91% and strong revenue growth of 67.43% in the last twelve months.
The firm’s analysis suggests that TKO Group’s shares are currently undervalued when compared to its industry peers. Konik’s commentary indicates a strong conviction in the stock’s potential, advising investors to continue purchasing shares at the current price levels. According to InvestingPro, TKO maintains a "GOOD" financial health score, with 13 additional exclusive ProTips available for subscribers. For comprehensive analysis and detailed valuation metrics, investors can access the full Pro Research Report, part of InvestingPro’s coverage of over 1,400 US stocks.
TKO Group Holdings, with its ownership of the UFC, stands to benefit from the ever-increasing value of live sports content in the media landscape. The anticipation of a lucrative media rights agreement is expected to significantly enhance the company’s financial profile in the coming years.
The UFC’s ability to secure a favorable deal is seen as a testament to its expanding popularity and the overall growth of mixed martial arts as a mainstream sport. With the media rights negotiation on the horizon, TKO Group Holdings appears poised for a positive financial uptrend, as indicated by Jefferies’ revised price target and sustained Buy rating.
In other recent news, TKO Group Holdings reported fourth-quarter earnings for 2024, revealing revenues and adjusted EBITDA that exceeded Wall Street expectations. Following these results, TKO Group completed acquisitions of IMG, On Location, and PBR, which align with its strategy to diversify offerings. Citi analysts maintained a Buy rating with a $170 price target, reflecting confidence in TKO’s strategic direction. Additionally, TD Cowen raised its price target for TKO Group to $200, citing strong underlying trends across the company’s properties and the positive impact of recent acquisitions.
Seaport Global Securities upgraded TKO Group from Neutral to Buy, setting a $164 price target, highlighting the company’s corporate restructuring and upcoming UFC broadcasting rights renewal as key factors. In contrast, Benchmark analysts maintained a Hold rating, pointing to challenges such as rising costs and uncertainties in UFC media rights renewal. Meanwhile, TKO Group announced a new partnership with Sela to promote global boxing, aiming to develop talent and enhance the sport’s presence. These developments underscore TKO Group’s ongoing efforts to expand its market presence and navigate industry challenges.
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