© Reuters. BofA starts WWE, UFC owner TKO Group (TKO) at Buy
Bank of America Securities analysts initiated research coverage on UFC and WWE owner TKO Group (TKO) with a Buy rating and a target price of $100.
“TKO, formed in Sept. 2023, represents a combination of two iconic brands, wrestling juggernaut WWE and mixed martial arts league UFC, with significant synergies and growth potential,” analysts said.
The investment bank projects a 13% compound annual growth rate (CAGR) for TKO in fiscal 2025 and 2026 years, as well as a 20% EBITDA CAGR and a 34% FCF CAGR expansion.
Analysts believe this offers “an attractive combination of top-line growth, margin expansion and free cash flow generation.”
BofA analysts consider the upcoming US media rights agreements for the UFC as the key driver for TKO’s mid-term performance.
Despite media rights purchasers becoming pickier, as shown by SmackDown’s modest rights increase, Netflix’s (NASDAQ:) recent acquisition of Raw rights introduces a global player, potentially boosting WWE’s worldwide appeal in the long run, they noted.
“We believe UFC’s US rights remain the crown jewel within the TKO’s media rights portfolio and will command significant increases upon renewal in ’26,” wrote BofA’s team.
