Macquarie Upgrades WWE As WrestleMania Season Kicks Off, Near-Term Downside Catalysts Fade Away

In a report published Monday, Macquarie upgraded World Wrestling Entertainment, Inc. WWE from Underperform to Neutral, as WrestleMania season kicks off and near-term downside catalysts fade away. Despite the promotion, the firm maintained its estimates and $11 price target.

Macquarie analyst James Clement explained the rating: “We think it's clear WWE’s long-term commitment to the struggling WWE Network is priced into the stock. We point to the roughly $105 million annual revenue WWE will derive from major TV rights contracts from 2014 to 2018 as the prime reason why core, non-network fundamentals are likely to improve.”

One of the main reasons behind the upgrade was the ruling from the company pulling the plug on the Network in relatively short order. In a recent investor presentation, management “stated firmly and clearly that any major change in course on the network was at least 24 months away.”

As the news transcended, the stock plummeted almost 15 percent in January. Macquarie now sees no other material downside catalysts, and thus changed its rating.

Finally, the report highlighted that “the months between the Royal Rumble and WrestleMania are typically the most exciting of the year and to the extent the company catches a wave of popularity, it often occurs in the March quarter -another reason to re-think selling the stock.”

Shares of WWE opened around $10.56.