Analyst Turns Incrementally Bullish On WWE After Q1 Earnings

World Wrestling Entertainment, Inc. WWE's first-quarter results prompted KeyBanc to become incrementally bullish on the stock.

The Analyst

KeyBanc Capital Markets' Evan Wingren maintains an Overweight rating on WWE with a price target lifted from $43 to $49.

The Thesis

WWE's earnings consisted of a beat on EPS while revenue fell short of expectations. The company posted a "major" OIBDA beat of $32.5 million, however, which exceeded the consensus estimates of $22.4 million, Wingren said in a report. Encouragingly, upside was driven in the quarter from increased monetization of its media content, subscriber growth and sponsorship revenue.

WWE didn't include any new insight related to the TV renewals, but the company's confirmation that ratings for "Monday Night Raw" grew from a year ago is a "proof point" it has "the wind at its back," the analyst wrote. The 30 percent growth in advertising and sponsorship in Q1 is yet "another proof point" that brands recognize the value and scale WWE offers, which bodes well for TV renewals.

Looking forward, Wingren raised WWE's 2018 revenue estimates from $838 million to $869 million and full year adjusted OIBDA is also lifted from $156 million to $178 million. The primary drivers for the more favorable outlook include the strong performance in the first quarter along with content momentum and the inclusion of the "Greatest Royal Rumble" in the financial model estimate.

Price Action

Shares of WWE were down about 2 percent at $40.62 late Friday morning.

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