3 Ways World Wrestling Entertainment Analyst Says UFC Merger Creates Value

Shares of World Wrestling Entertainment, Inc. WWE rose after news of Endeavor Group Holdings, Inc EDR's plans to merge its UFC subsidiary with WWE and list the new entity on the NYSE as "TKO." 

The merged entity would benefit from “the secular tailwinds behind sports and entertainment media rights revenues, live content, and the defensive characteristics of largely contracted revenue growth,” according to Morgan Stanley.

The World Wrestling Entertainment Analyst: Benjamin Swinburne upgraded World Wrestling Entertainment from Equal-Weight to Overweight while raising the price target from $105 to $120.

The World Wrestling Entertainment Takeaways: Sports assets will remain an area of secular growth, Swinburne said in the upgrade note.

Check out other analyst stock ratings.

The analyst mentioned three ways in which the UFC-WWE transaction creates value:

• The merged entity will be a pure-play sports and entertainment company.
• WWE enters the merger debt-free and the merged entity’s free cash flow conversion “will allow it to rapidly de-lever its own balance sheet.”
• The deal has clear cost synergies and “potentially meaningful” revenue opportunities.

WWE Price Action: Shares of World Wrestling Entertainment were trading 0.57% higher at $103.35 Thursday morning. 

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