Analyst: WWE's Stock Is Worth A Buy Ahead Of WrestleMania Weekend

World Wrestling Entertainment, Inc. WWE will host its iconic WrestleMania event this weekend, which prompted KeyBanc to reiterate a bullish stance on the stock.

The Analyst

KeyBanc Capital Markets' Evan Wingren maintains an Overweight rating on World Wrestling Entertainment's stock with an unchanged $43 price target.

The Thesis

WrestleMania 34 takes place Sunday and is the WWE's biggest subscriber acquisition event of the year, Wingren said in a research note. An estimated 2.05 million people will tune in to the event, of which 1.75 million people are paid WWE Network subscribers and 300,000 people on a trial subscription although the majority of people who signed up for a trial won't convert to a paid subscription.

Linear viewership for WWE's weekly "Monday Night Raw" program is up 3 percent from the first quarter a year ago, which Wingren said marks a reversal from declining metrics in recent years. Coupled with in-line search trends for "WrestleMania" compared to prior matches, Sunday's event could be "slightly above" what it has been in prior years.

Favorable trends for WWE justifies a 13 times multiple on 2020 adjusted OIBDA of $263 million, which yields a price target of $43, the analyst said. This multiple is within the stock's historical range and slightly above the three-year average EV/EBITDA multiple NTM.

Price Action

Shares of World Wrestling Entertainment were trading higher by 1.7 percent at $37.70 early Friday morning.

Related Links:

Fox Sports Execs Attend 'SmackDown Live'; Here's Why That's Good News For WWE

WWE Is Still A Heavyweight; KeyBanc Upgrades Stock Ahead Of TV Renewal Cycle

Image credit: Miguel Discart, Flickr