World Wrestling Entertainment, Inc. (NYSE: WWE) has been red hot in the past year on optimism about the company’s global TV content deals. Despite the stock’s 150-percent gain in the past year, one Wall Street analyst said it’s too early to get off the WWE train.
JPMorgan analyst David Karnovsky reiterated his Overweight rating for WWE and raised his price target from $95 to $105.
Karnovsky listed three primary reasons he is still bullish on WWE stock:
- WWE has a string of bullish near-term catalysts ahead, including TV deals in India, the U.K., the Middle East, Latin America and China.
- WWE could potentially sell a third hour of “SmackDown” content.
- The shift of the “SmackDown” program from USA Network to Fox Corp (NASDAQ: FOX) (NASDAQ: FOXA) will expose WWE to a larger audience.
“We continue to see upside to WWE shares, with the stock remaining our top pick in the live entertainment subsector,” Karnovsky wrote in a note.
He is especially bullish on WWE’s upcoming India TV deal renewal. Based on trends in recent content deals, Karnovsky raised his estimate for the India deal from 2.25 times the average annual value of the current India deal to 2.75 times current AAV.
Karnovsky estimates WWE will begin generating $25 million per year in revenue from a third hour of weekly “SmackDown” content starting in 2020. He said the most likely destination for this third hour of content would be FS1.
“SmackDown” makes it Fox debut in October. A larger broadcast audience coupled with promotions during Thursday Night Football the World Series and other high-profile Fox sports events is bullish for WWE, Karnovsky said.
WWE's stock traded higher by 3.2 percent to $99.20 per share.
Analyst: WWE Network Subscriber Data Bullish Ahead Of WrestleMania
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|Dec 2018||Initiates Coverage On||Hold|
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