WWE Primed To Navigate The Future Of TV; PacCrest Says Buy It Now

Pacific Crest’s Evan Wingren initiated coverage of World Wrestling Entertainment, Inc. WWE with an Overweight rating, with a price target of $22. The analyst commented that the company appeared to be “well positioned to navigate the future of TV via its Internet-based direct-to-consumer network.”

Strong Growth Ahead

The WWE Network serves a specific audience in great depth, and has witnessed solid subscriber growth to date. Analyst Evan Wingren expects this to continue growing, and believes the company could approach 4 million paying subscribers by 2025. He added that the company’s D-2-C network could drive robust growth and high incremental profitability.

Content Value To Appreciate

WWE's content is mainly consumed live, and this could continue to warrant premium value “as networks become increasingly reliant on live content,” Wingren mentioned.

The analyst pointed out that the company’s revenue growth for the next three years is mostly locked, given the contractual agreements, and is not impacted by ratings or MVPD subscriber losses. This is favorable against the backdrop of secular headwinds in the pay-TV ecosystem.

Estimates

The revenue and OIBDA estimates for 2016 are at $717 million and $76 million, and for 2017 are at $757 million and $98 million, respectively. The estimates reflect growth in the Media segment, which in turn “assumes strong growth in WWE Network subscribers, Television revenue and media margin expansion.”