Jefferies initiates coverage on TKO, cites Netflix-WWE deal
Jefferies is initiating coverage on TKO Group Holdings (TKO) — the parent company of live-sports entertainment empires WWE and UFC — with a Buy rating and price target of $120 per share, citing WWE's streaming partnership with Netflix (NFLX). The WWE is also planning to launch a weekly series on X.com titled WWE Speed.
Yahoo Finance Live examines TKO's catalysts as it maneuvers through these streaming deals.
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Editor's note: This article was written by Luke Carberry Mogan.
Video Transcript
- TKO shares edging higher this morning after Jefferies initiated coverage of the entertainment platform, kicking it off with a buy rating and $120 price target-- the firm saying that TKO is well positioned thanks to its deal with Netflix. Sponsorship, growth, and live events as well playing into that overall viewpoint that they have on TKO as well right now.
- It's true, really leaning into that demand for live sports and that sort of content, especially as more streaming services getting into the mix as well when you think of Amazon with Thursday Night Football, Apple with the MLS and Friday Night Baseball, and, of course, a merger of some of these streaming services with some of these skinny bundles.
But it's interesting that they see them really feeding into each other-- the WWE, which is one of their assets, and the other one, which is the UFC. So you basically have these sports entertainment-- I mean, depending on how you define sports--
- Oh, you're not going to get me in that conversation.
- UFC in terms of the pure play what I think of sports, but then sports entertainment what I think of WWE. But the way that they can feed into each other when you think of, especially the size of the viewer base of the WWE, ending up being a win-win according to this note.
- You know, I said I wouldn't let you get me into this conversation, but I'm going to do it anyway. Look, mixed martial arts that is artistry at the end of the day. WWE is a scripted series. Let's be real. At the end of the day, one of the huge things that we're going to watch though with both of these entities is how they play out in this streaming landscape-- huge deals that they've been able to get going forward, both Netflix and as well on the social media platform X, formerly Twitter.
And one of the huge things that they point out within this is they believe that TKO deserves a peer multiple currently trading at 12 times EBITDA versus peers at about 16 times. So one of the huge things, they're looking across the margin profile, free cash flow generation, and backlog of catalysts. That's going into their multiple thesis here as well too. Shares up 1%.
- It's true. Really talking about those meaningful media rights saying, look, it's well positioned for healthy growth and margin performance as well. So really feeding into each other. It looks like a good pairing here.
-Absolutely.
