Bullish indicating open at $55-$60, IPO prices at $37
Investing.com - Benchmark maintained its Hold rating on TKO Group Holdings (NYSE:TKO) following the company’s second-quarter results, citing structural vulnerabilities despite solid headline growth. According to InvestingPro data, TKO trades at a high P/E ratio of 91.6x, though analysts expect net income growth this year. The stock currently sits near its Fair Value based on comprehensive analysis.
The firm noted that UFC’s live events and hospitality revenue declined due to site fee timing issues, while IMG revenue contracted because of rights losses. WWE’s attendance also fell as the company held fewer events during the quarter. Despite these challenges, TKO maintains strong fundamentals with a healthy gross profit margin of 74.8% and liquid assets exceeding short-term obligations.
Benchmark highlighted calendar headwinds facing TKO in the third quarter, including fewer UFC numbered events and revenue reductions from SmackDown’s format change affecting media rights income.
The recently announced ESPN/WWE PLE deal, while representing an increase in rights fees, excludes previously bundled content that must now be monetized separately, according to the research firm.
Benchmark expressed concern about TKO’s heavy reliance on high-profile events, the pending UFC rights renewal, and integration execution risks, stating these factors leave little margin for error against elevated market expectations.
In other recent news, TKO Group Holdings reported strong second-quarter results, exceeding both analyst and market expectations. The company achieved revenues of $1.31 billion, surpassing the projected $1.22 billion. TKO’s earnings per share (EPS) also beat forecasts, coming in at $1.17 compared to the anticipated $1.13. UBS responded to these impressive results by raising its price target for TKO Group from $195 to $200, while maintaining a Buy rating. The company’s EBITDA reached $526 million, outstripping UBS’s forecast of $496 million and the market’s estimate of $475 million. This performance was largely driven by strong results from WWE. Despite these positive financial outcomes, TKO’s stock experienced a decline in after-hours trading. These developments highlight the complex dynamics influencing investor sentiment.
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