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On Monday, TD Cowen’s analyst Lance Vitanza updated the firm’s outlook on TKO Group Holdings (NYSE: TKO), raising the price target to $220 from $200, while maintaining a Hold rating on the stock. The stock, currently trading at $165.09, has shown impressive momentum with a 55.6% return over the past year. According to InvestingPro analysis, TKO is currently trading near its Fair Value, with strong financial health indicators scoring "GOOD" overall. Vitanza’s revision follows TKO’s recent financial disclosures related to its newly acquired assets, which are expected to drive significant earnings and cash flow growth in the coming years.
TKO Group Holdings, which recently expanded its portfolio through acquisitions, is now anticipated to exhibit an improved financial performance. On February 28, 2025, TKO completed the purchase of On Location, Professional Bull Riders, and a substantial part of IMG’s assets from Endeavor, which has since become a private entity. These acquisitions are poised to contribute positively to TKO’s earnings, with InvestingPro data showing revenue growth of 10.04% in the last twelve months and analysts forecasting continued sales growth this year. Get access to 13 more exclusive InvestingPro Tips and comprehensive analysis for TKO through the Pro Research Report.
Vitanza noted that, despite TKO’s stock trading at a considerable discount compared to its closest competitor, the company displays an equal or better growth outlook for the short, medium, and long term. The new price target of $220 incorporates a modest multiple compression to 20 times the forecasted fiscal year 2026 adjusted EBITDA, down from the current 22 times fiscal year 2025 estimate. This adjustment, according to Vitanza, could still be on the conservative side, particularly given TKO’s strong gross profit margin of 69.77% and healthy current ratio of 1.25.
The financial projections for TKO have been updated to reflect the impact of the acquisitions. Previously, the public had limited financial details about the company, but with the new information, TD Cowen has forecasted a pro forma EBITDA growth of 13% for fiscal year 2025, accelerating to approximately 30% in fiscal year 2026. Vitanza previously argued that a $200 price target was justified, but given the recent developments, an increased target has now been set. For deeper insights into TKO’s valuation and growth prospects, including exclusive financial metrics and expert analysis, explore the comprehensive Pro Research Report available on InvestingPro.
In other recent news, TKO Group Holdings reported impressive first-quarter 2025 earnings, surpassing analyst expectations with an earnings per share (EPS) of $0.69, compared to the forecasted $0.57. The company’s revenue reached $1.27 billion, significantly exceeding the anticipated $703.74 million, marking a strong start to the year. The UFC and WWE segments contributed notably to this growth, with revenues increasing by 15% and 24%, respectively. Despite these positive results, Benchmark maintained a Hold rating on TKO Group, citing concerns about the uneven organic growth and a 13% decline in revenue for the IMG segment. Analysts highlighted the potential risks related to the integration of recent acquisitions, rights renewals, and capital deployment strategies. TKO Group’s management increased their full-year 2025 guidance, projecting revenue between $4.49 billion and $4.56 billion. The company is also contemplating a share repurchase program in the second and third quarters. These developments reflect TKO Group’s strategic focus on expanding its sports and entertainment portfolio while navigating potential challenges.
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