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Investing.com - Goldman Sachs raised its price target on TKO Group Holdings (NYSE:TKO) to $202.00 from $188.00 on Monday, while maintaining a Buy rating following the company’s new UFC media rights deal. The stock, currently trading near its 52-week high of $182.60, has gained nearly 40% over the past year. According to InvestingPro data, analysts maintain a strong bullish consensus on TKO, which boasts an impressive 74.8% gross profit margin.
TKO Group and Paramount announced a $7.7 billion seven-year media rights agreement that will make Paramount the exclusive home of all UFC events in the United States. The deal has an average annual value (AAV) of $1.1 billion, which Goldman Sachs estimates represents approximately a 2.45x step-up from the previous contract. This significant deal comes as InvestingPro analysis shows TKO’s net income is expected to grow this year, with multiple analysts revising their earnings estimates upward.
The investment bank noted that the average value of the new UFC media rights deal exceeded both their expectations of a 2.0x AAV increase to approximately $900 million and general buy-side expectations, based on recent investor conversations.
Goldman Sachs highlighted several positive aspects of the deal, including greater reach through moving away from pay-per-view toward more inclusive distribution at Paramount, and potential upside from new advertising inventory. The UFC will receive two minutes of advertising inventory per hour of broadcast, as well as economic rights to other sponsorship and partner inventory.
The firm reiterated its Buy rating on TKO Group shares following the completion of the new UFC domestic media rights contract, though it noted investors may debate the quality of the distribution partner in Paramount/CBS.
In other recent news, TKO Group Holdings reported strong second-quarter results, with revenues reaching $1.31 billion, surpassing both UBS’s estimate of $1.27 billion and the broader market expectation of $1.22 billion. The company’s EBITDA also exceeded forecasts, achieving $526 million compared to UBS’s prediction of $496 million and the market’s projection of $475 million. This performance prompted UBS to raise its price target for TKO Group to $200 while maintaining a Buy rating. Additionally, TKO Group has entered a significant seven-year media rights agreement with Paramount, valued at an average annual amount of $1.1 billion, to distribute UFC events exclusively in the United States starting in 2026.
Meanwhile, Morgan Stanley (NYSE:MS) maintained its Equalweight rating for TKO Group, highlighting a new distribution agreement that expands the UFC’s reach through CBS network exposure. Jefferies reiterated its Buy rating, emphasizing confidence in TKO’s media rights strategy. However, Benchmark maintained a Hold rating, citing structural concerns despite overall growth, noting declines in UFC live events and WWE attendance due to fewer events.
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