Balanced Outlook for TKO Group Holdings Amid Merger Integration and UFC Media Rights Uncertainty

Analyst Benjamin Swinburne of Morgan Stanley maintained a Hold rating on TKO Group Holdings (TKO – Research Report), retaining the price target of $160.00.

Benjamin Swinburne has given his Hold rating due to a combination of factors influencing TKO Group Holdings. The company is currently in the process of integrating its recent merger with WWE and newly acquired assets from Endeavor, which adds complexity to its operations. While the operating results are strong, the balance between risk and reward appears to be even, especially considering the expectations surrounding the UFC media rights.
Swinburne notes that the potential upside for TKO shares is approximately 20% based on a bullish scenario, which assumes significant increases in the average annual value of UFC and WWE contracts. However, there is also a potential downside of around 30% in a bearish scenario, which assumes more modest increases in these contracts. The company’s financial forecasts are affected by stock-based compensation and cash tax distributions to its majority shareholder, Endeavor. Additionally, the outcome of the UFC rights renewal is crucial, as it will significantly impact TKO’s financial performance. Despite the potential for growth through partnerships and marketing revenues, there are risks associated with executing on these opportunities.

According to TipRanks, Swinburne is a 5-star analyst with an average return of 13.7% and a 60.30% success rate. Swinburne covers the Communication Services sector, focusing on stocks such as Spotify, Charter Communications, and Sphere Entertainment.