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On Wednesday, Seaport Global Securities analyst David Joyce upgraded TKO Group Holdings (NYSE:TKO) stock from Neutral to Buy, setting a price target of $164. Joyce cited the recent decline in TKO’s share price - which has fallen 8.05% in the past week - as an opportunity for investors, suggesting that the risk/reward balance now favors entry. According to InvestingPro analysis, TKO appears undervalued at current levels, despite its impressive 82.06% return over the past year.
TKO Group completed a significant corporate restructuring by acquiring the remaining sports-related assets from its parent company, EDR, on February 28, 2025. Furthermore, EDR’s transition to a private company is scheduled for March 24, 2025. Joyce believes these developments will refocus investor attention on TKO’s business, particularly the upcoming renewal of the Ultimate Fighting Championship (UFC) broadcasting rights with Disney/ESPN, which are due to expire in mid-April. The company’s strong financial health is evidenced by its 1.3 current ratio and moderate debt levels, as reported by InvestingPro.
The analyst also highlighted that the addition of site license fees and the creation of multisport synergies are fundamental growth drivers currently in progress for TKO Group. Despite potential concerns about consumer impacts from ongoing tariff issues, Joyce expects TKO’s assets, including live events from UFC and WWE, to demonstrate resilience in the face of economic downturns, with pricing likely to remain stable for most product offerings.
Joyce’s assessment is that investor sentiment often reflects a greater contraction than the actual performance of the business during turbulent times, implying that TKO’s current position may undervalue its underlying strength and potential for growth.
In other recent news, TKO Group Holdings reported strong fourth-quarter earnings for 2024, exceeding analysts’ expectations with an earnings per share (EPS) of $0.28, significantly surpassing the forecasted $0.17. The company also reported revenue of $642.2 million, outpacing the projected $603.41 million. Following these results, TD Cowen raised its price target for TKO Group to $200, maintaining a Buy rating, citing confidence in the company’s long-term growth prospects and strategic initiatives. Meanwhile, Guggenheim also adjusted its price target to $175, emphasizing the potential for conservative guidance and synergies from the integration of WWE and UFC.
However, not all analysts shared the same optimism. Benchmark maintained a Hold rating on TKO Group, pointing to challenges such as rising costs and uncertainties surrounding the renewal of UFC media rights. Concerns were also raised about the company’s recent acquisitions and their impact on shareholder value. Despite these challenges, TKO Group’s strategic moves, including the renewal of media rights and successful integration of acquisitions, were seen as positive factors by some analysts.
Additionally, TKO Group has set a revenue target of $2.93 billion to $3 billion for 2025, with adjusted EBITDA expected between $1.35 billion and $1.39 billion. The company’s guidance reflects strategic initiatives such as expanding international events and exploring partnerships, including a potential boxing league collaboration with Saudi Arabia. These developments, along with ongoing media rights negotiations, are key areas of focus for the company moving forward.
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