On Thursday, TKO Group Holdings (NYSE:TKO) received a boost in its share price target to $121 from $112, while retaining a Buy rating from Roth/MKM.
This adjustment comes in the wake of the company's robust first-quarter performance, which surpassed expectations and led to an increase in its full-year guidance.
The company's impressive results were attributed to the strong performances of UFC and WWE, which also contributed to a significant improvement in margins.
The revised price target by Roth/MKM reflects the first-quarter outperformance and anticipates an additional $25 million in revenue from a one-quarter extension of WWE Raw with the USA Network.
Roth/MKM highlighted that TKO's key concerns have been addressed, allowing the company's strong fundamentals to be the focal point. The firm recognizes multiple avenues for growth for TKO, including rights fees, sponsorships, and site fees associated with both the UFC and WWE brands.
The new price target is based on 16 times and 12 times the estimated adjusted EBITDA for the years 2025 and 2026, respectively. This valuation adjustment is a testament to the company's strong start to the year and the anticipated continued success of its key brands.
InvestingPro Insights
As TKO Group Holdings (NYSE:TKO) rides the momentum of a successful first quarter, insights from InvestingPro suggest a promising outlook for the company. With analysts expecting net income and sales growth this year, the company's strategic moves are starting to pay dividends. Specifically, InvestingPro Tips indicate that TKO is projected to be profitable this year, which aligns with the revised price target from Roth/MKM. Additionally, despite two analysts revising their earnings downwards for the upcoming period, the company's moderate level of debt and strong revenue growth of 46.91% over the last twelve months as of Q1 2023 demonstrate a solid financial structure.
InvestingPro Data further enriches this perspective, showing that TKO is trading at a high revenue valuation multiple with a revenue of $1674.97M USD as of the last twelve months. The company does not pay a dividend, which could be indicative of reinvesting earnings back into the business for future growth. Moreover, the market cap of TKO stands at $16.74 billion, and though it currently has a negative P/E ratio, the anticipated profitability could change this metric in the near future.
For investors looking to delve deeper into TKO's financial health and future prospects, additional InvestingPro Tips can be found at https://www.investing.com/pro/TKO. To access these insights, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With 6 more tips available on InvestingPro, investors can gain a comprehensive understanding of TKO's potential trajectory.
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