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WWE's Stock Breaking Out As Company Ramps For WrestleMania

WWE's Stock Breaking Out As Company Ramps For WrestleMania

Less than a month before WrestleMania 35 in East Rutherford, New Jersey, World Wrestling Entertainment, Inc. (NYSE: WWE) stock ripped higher Thursday after the company got its highest Wall Street price target yet.

Wolfe Research Gets Bullish

WWE's stock was up 3.5 percent to its highest level of 2019 after Wolfe Research raised its price target for WWE shares from $105 to $157, a new high water mark among analysts covering the stock. The average analyst price target for WWE is $100.

Wolfe analyst Marci Ryvicker said WWE’s earnings and revenue growth puts the stock in rare company along with stocks like Liberty Media/Formula One (NASDAQ: FWONA), Manchester United (NYSE: MANU) and Madison Square Garden (NYSE: MSG).

The new price target represents more than 70 percent upside for WWE stock, which is already up more than 400 percent in the past three years on the strength of huge new U.S. TV deals. Several analysts remain bullish on WWE’s outlook for 2019 and beyond given new TV deals in the U.K. and India in the works.

WrestleMania Bump

WWE investors are also expecting big things from next month’s WrestleMania event, it’s biggest show of the year. Last year’s WrestleMania in New Orleans reportedly had a $175 million impact on the local economy. The 78,133 fans that attended last year’s event made it the highest-grossing event in history at the Superdome at $14.1 million.

The main event for this year’s event has yet to be confirmed, but it could be the first ever WrestleMania with an all-female final. "Monday Night Raw" Women’s Champion and former UFC superstar Ronda Rousey is defending her championship against the company's fast-rising star, Becky Lynch, as well as Charlotte Flair at WrestleMania.

Technical Take

WWE bulls are hoping for a WrestleMania repeat of what happened last year. WWE's stock was trading near all-time highs of around $37 prior to WrestleMania last year. In the six months that followed, the stock went on a tear, peaking at $97.40 in late September. Since then, the stock has stalled, but the latest move once again has it within arms length of all-time highs heading into WrestleMania.

One difference between this year’s situation and last year’s is that the meteoric rise in WWE stock has gotten the attention of short sellers. Short interest is up 23.5 percent in the past year to 7.5 million shares, or about 24.8 percent of the stock’s float.

Technical traders will be watching last year’s high of $97.40 closely. If the stock fails to break above that level following WrestleMania, short sellers could push the stock much lower. If WWE shares break above the $97.40 level, short covering could put the $157 target in play much sooner than expected.

The stock closed Thursday at $90.63 per share.

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Photo credit: InFlamester20, Wikimedia

Latest Ratings for WWE

Apr 2020BenchmarkMaintainsBuy
Apr 2020Morgan StanleyMaintainsEqual-Weight
Apr 2020BenchmarkUpgradesHoldBuy

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