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Is TKO stock a buy?

TKO stock

Following the company’s first quarter results, Roth MKM analyst Eric Handler has maintained his “Buy” rating on TKO Group (TKO Group Stock Quote, Chart, News, Analysts, Financials NYSE:TKO).

On May 8, TKO reported its Q1, 2024 results. The company posted Adjusted EBITDA of $282.2-million on revenue of $629.7-million, a topline that was up 105% over the same period last year.

“TKO is off to a strong start in 2024 with multiple record-setting live events, new brand partnerships, and media rights deals for WWE Raw,” said CEO Ariel Emanuel. “With our momentum in the first quarter and solid financial results, we have raised our full year 2024 guidance. We also reached an agreement to settle all claims asserted in both UFC antitrust lawsuits. These positive developments, along with the strength in our underlying businesses, give us more conviction than ever in the combination of UFC and WWE, and in TKO’s ability to deliver sustainable long-term value for shareholders.”

The analyst says this was a very good start to the year.

“TKO reported better-than-expected 1Q results and raised its full-year guidance,” he wrote. “Upside was seen from UFC and WWE along with meaningful margin improvement. Our higher 2024 forecast reflects the 1Q outperformance along with $25mn from a one-quarter WWE Raw extension with USA Network. With key overhangs out of the way, fundamentals can shine with multiple growth opportunities (rights fees, sponsorships, site fees) from both brands.

In a research update to clients May 9, Handler maintained his “Buy” rating on TKO Group and raised his price target from $112.00 to $121.00.

The analyst thinks the company will post EBITDA of $1.2-billion on revenue of $2.68-billion in fiscal 2024. He expects those numbers will improve to EBITDA of $1.36-billion on a topline of $2.93-billion in fiscal 2025.

Our $121 price target for TKO is based on 16/12x our 2025E/2026E adjusted EBITDA. This valuation represents a multi-turn discount to Formula 1 (FWONA: NC), which we view as TKO’s closest comparison,” Handler said.

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About The Author /

Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.
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