TKO Group stock maintains Buy rating at UBS amid UFC rights negotiations

Investing.com - UBS has reiterated its Buy rating and $195.00 price target on TKO Group Holdings (NYSE:TKO), citing expected momentum in partnership revenues and ticket sales for the second quarter. Currently trading at $174.48, TKO is near its 52-week high of $182.60, with InvestingPro data showing the stock is fairly valued based on its proprietary Fair Value model.

The firm projects consolidated revenues of $1.27 billion and EBITDA of $496 million for TKO Group’s second quarter, exceeding Street expectations of $1.22 billion and $467 million respectively. UBS maintains full-year estimates at the high end of guidance, forecasting $4.55 billion in revenue and $1.53 billion in EBITDA. These projections align with TKO’s strong financial performance, as evidenced by its impressive 69.8% gross profit margin and 10% revenue growth over the last twelve months.

UBS notes that negotiations for UFC media rights are progressing in the post-exclusive window, with ESPN, Netflix (NASDAQ:NFLX), Amazon (NASDAQ:AMZN), and Warner Bros identified as potential bidders in recent press reports. The firm’s estimates reflect a 1.8x average annual value increase over seven years for these rights.

While media rights renewals remain the primary driver for TKO Group’s medium-term financial performance, UBS identifies additional catalysts including new site fee and sponsor agreements, continued momentum in ticket sales, and WWE revenue synergies.

The introduction of a share repurchase program is also highlighted as a potential catalyst for TKO Group, which combines UFC and WWE under one corporate umbrella.

In other recent news, TKO Group Holdings has been the focus of several analyst updates and company announcements. Guggenheim has raised its price target for TKO Group to $200, citing a strong business outlook, particularly in its UFC and WWE segments, with an EBITDA forecast exceeding company guidance. Bernstein SocGen Group has reiterated its Outperform rating and a $190 price target, highlighting TKO’s growth opportunities in combat sports and the potential for the UFC rights renewal to exceed $1 billion annually. Additionally, TD Cowen has increased its price target to $220, reflecting optimism about TKO’s recent acquisitions and their positive impact on earnings and cash flow.

Furthermore, TKO Group has announced a quarterly dividend of $0.38 per share, amounting to approximately $75 million, payable to shareholders in June 2025. This decision is based on the company’s financial performance and market conditions. The company’s strategy to enhance live events and capitalize on site fees is seen as a growth opportunity, particularly with recent acquisitions like On Location and Professional Bull Riders. These developments contribute to a positive outlook for TKO Group, with analysts noting the company’s potential for sustained growth in the sports entertainment sector.

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