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Bruised And Battered, But Not Broken: Wall Street Reacts To WWE's Earnings Miss

Wayne Duggan

World Wrestling Entertainment, Inc (NYSE: WWE) stock traded lower by another 3.8 percent on Friday after the company reported a first-quarter earnings and revenue miss. The stock is now down 16.2 percent overall since Thursday's print.

WWE reported a first-quarter EPS loss of 11 cents on revenue of $182.4 million, missing consensus analyst estimates by 9 cents and $16.6 million, respectively. Surprisingly, revenue was down 2.6 percent from a year ago.

Several analysts have weighed in on WWE. Here’s a sample of what they’ve had to say.

Guidance Reassuring

CFRA analyst Tuna Amobi said the fact that WWE reiterated previous guidance for full-year revenue and earnings is reassuring and implies a second-half rebound in 2019.

“Adjusted EBITDA margins significantly narrowed 1,200 basis points, squeezed by ongoing investments in content, localization and digitization, including platform investments at WWE Network and, to a lesser extent, reduced live attendance,” Amobi wrote in a note.

Morgan Stanley analyst Benjamin Swinburne said the rough quarter bruised the WWE bull thesis, but it didn’t break it.

“Fortunately, giant license fees from Fox and NBC await in 4Q19 and beyond, limiting the earnings risk from both near-term softness and the key investments needed to maximize the opportunity,” Swinburne wrote.

KeyBanc analyst Evan Wingren said soft live event attendance and talent difficulties have provided a buying opportunity for investors.

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“Talent injuries and departures are creating NT softness in engagement, which modestly impacted results,” Wingren wrote.

TV Contracts Are Key

Guggenheim analyst Curry Baker said new TV deals will ultimately erase all of the concerns over the weak first quarter.

“Despite a negative reaction to 1Q results, we believe WWE remains on-track to deliver transformative OIBDA growth in 2020 driven by the reset of its TV contracts,” Baker wrote.

MKM Partners analyst Eric Handler said WWE investors shouldn’t sweat the near-term outlook because the long-term picture is just fine.

“Most importantly, the company's most significant long-term driver, the impact from WWE's new (5-year) U.S. TV contract for Raw and Smackdown and the associated step-up in revenue beginning in 4Q19 is firmly in place,” Handler wrote.

Ratings And Price Targets

  • CFRA has a Hold rating and $90 target.
  • Morgan Stanley has an Overweight rating and $100 target.
  • KeyBanc has an Overweight rating and lowered its target to $101.
  • Guggenheim has a Buy rating and $105 target.
  • MKM has a Buy rating and $110 target.

WWE's stock traded around $82.07 per share at time of publication.

Related Links:

A Peek Behind The Curtain: The Business Of Indie Wrestling During WrestleMania Weekend

JPMorgan Raises WWE's Price Target, Bullish On 'Smackdown' Future

Photo credit: GabboT, Flickr

Latest Ratings for WWE

Date Firm Action From To
Apr 2019 Maintains Overweight Overweight
Apr 2019 Maintains Overweight Overweight
Mar 2019 Maintains Buy Buy

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