World Wrestling Entertainment, Inc. WWE's WrestleMania event was a success and the case for owning the stock remains compelling, according to KeyBanc.
The Analyst
KeyBanc Capital Markets' Evan Wingren maintains an Outperform rating on WWE's stock with an unchanged $43 price target.
The Thesis
WWE said its total WWE Network subscriber base was 2.12 million, which exceeded KeyBanc estimates of 2.05 million. Paid subscribers were around 60,000 above expectations at 1.81 million and the company's second quarter average paid subscriber guidance of 1.77 million exceeded expectations of 1.68 million. The guidance implies a re-acceleration to 8 percent growth, which should be viewed "positively" as it's a closely watched metric among investors.
WWE also alluded to a tier system for WWE Network that will come sooner rather than later. This is a feature that's likely to include a lower-tiered pricing plan which includes advertising that could be a "key source of gross additions" and lead to incremental subscriber growth, Wingren said.
As a result of the Network subscribers, WWE raised its Q1 AOIBDA outlook from $23 million-$27 million to $30 million.
Management's commentary on the upcoming TV renewal cycle remains "relatively muted" but Wingren said expectations remain in place for the company to see a "substantial increase in annual contract value across all of its new TV deals."
Price Action
Shares of WWE were trading about 2.6 percent higher at $38 Tuesday morning.
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Image credit: Miguel Discart, Flickr
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