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Investing.com - TKO Group Holdings (NYSE:TKO) received a price target increase from BofA Securities on Tuesday, following the company’s announcement of a new media rights deal with Paramount. The stock, which has surged over 10% in the past week and is trading near its 52-week high of $182.60, maintains a strong bullish consensus among analysts with a 1.47 rating according to InvestingPro data.
BofA Securities raised its price target on TKO Group to $210.00 from $200.00 while maintaining a Buy rating on the stock. The adjustment comes after TKO announced on Monday that Paramount acquired the domestic broadcast rights to the UFC, which were previously held by ESPN. With a robust gross profit margin of 74.81% and projected revenue growth of 66% for FY2025, TKO continues to demonstrate strong financial fundamentals.
The new agreement spans seven years with an average annual value of $1.1 billion, representing approximately a twofold increase compared to the existing deal. This exceeds BofA’s prior estimate of a 1.8x step-up and removes the pay-per-view component that was included in the previous arrangement.
BofA noted the deal came as a surprise regarding both the partner and dollar amount, particularly given the recent change in control at Paramount and expectations that major streaming services like Netflix (NASDAQ:NFLX) and Amazon (NASDAQ:AMZN) had shown interest in increasing their presence in sports content.
The agreement does not include international rights, which BofA indicated could provide additional monetization opportunities for UFC as those rights come up for renewal, with Paramount potentially showing interest in those rights as well.
In other recent news, TKO Group Holdings has announced a significant seven-year media rights agreement with Paramount, valued at $7.7 billion. This deal will make Paramount the exclusive home for all UFC events in the United States, with an average annual value of $1.1 billion. Analysts at Goldman Sachs responded by raising their price target for TKO Group to $202 while maintaining a Buy rating, highlighting the deal as a substantial improvement over previous contracts. Jefferies also reiterated a Buy rating with a $220 price target, emphasizing confidence in TKO’s strategic renegotiation of media rights. Meanwhile, Morgan Stanley (NYSE:MS) maintained an Equalweight rating and a $165 price target, noting the expanded reach of UFC events through national exposure on CBS. Despite these developments, Benchmark held its Hold rating, expressing concerns over structural vulnerabilities, including declines in live event revenue and WWE attendance. These recent developments reflect the varied analyst perspectives on TKO Group’s strategic moves and financial health.
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