KeyBanc: WWE's Stock Has 'More Room' For Long-Term Growth

Shares of World Wrestling Entertainment, Inc. WWE continued to hit new all-time highs Wednesday, but KeyBanc thinks the case for incremental upside can still be made.

The Analyst

Evan Wingren, equity research analyst at KeyBanc Capital Markets, maintains an Overweight rating on WWE with a price target lifted from $71 to $85.

The Thesis

WWE's TV contract renewal announcement is just one of the multiple positive catalysts to support WWE's stock, Wingren said in a note. Specifically, the TV renewal deal implies an annual contract value growth of 3.6 times, which was better than the analyst's expectations of a 3 times growth. As such, the analyst's revenue and adjusted OIBDA estimates for fiscal 2019 move from $951 million and $232 million to $966 million and $235 million, respectively.

Having completed the TV renewal, WWE can move on to accelerate sponsorship and new content opportunities, which Wingren said may have required incremental investments or previously deemed too risky to undertake.

The company faces three potential upcoming catalysts:

• Renewal of the United Kingdom TV deal in the bottom half of 2018;
• Renewal of the India deal in the first half of 2019; and
• The potential to grow its base by tiering the WWE Network.

KeyBanc's revised $85 price target is based on a 14 times multiple on a revised fiscal 2020 estimate of $461 million (prior estimate of $417 million).

Price Action

Shares of WWE were trading higher by 3.4 percent at $73.27 early Thursday morning. Citigroup also raised its price target on the stock from $43 to $69.

Related Links:

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25 Biggest Moments In WWE's Wall Street History

Image credit: Chairman of the Joint Chiefs of Staff, Flickr