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As WrestleMania Returns, Is Now The Time To Buy WWE's Stock?

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As WrestleMania Returns, Is Now The Time To Buy WWE's Stock?

World Wrestling Entertainment, Inc. (NYSE: WWE) fans and investors are gearing up for WrestleMania 37 this weekend, the company’s largest live event of the year. This year’s WrestleMania will be a two-night event held at Raymond James Stadium in Tampa, Florida.

It will also make history as the first WrestleMania event to be streamed exclusively via the WWE Network on the Comcast (NASDAQ: CMCSA) Peacock streaming service. It will also be the first event at which WWE will have ticketed fans in attendance since the beginning of the COVID-19 pandemic.

WWE investors had a rough 2020, and the stock is still down 11.8% from where it was at the beginning of last year. Investors are hoping that a big WrestleMania weekend could provide a shot in the arm for the company’s second-quarter numbers.

Analysts are mixed about the outlook for WWE after the company announced a $1 billion deal with NBCUniversal back in January to bring the WWE Network exclusively to Peacock for the next five years.

Here’s a look at the bull case and bear case for WWE heading into WrestleMania weekend.

Related Link: WWE Shifts NXT To Tuesday Night, Broadening Pro Wrestling's Weekly TV Grip

Bull Case: On Thursday, MKM Partners analyst Eric Handler reiterated his Buy rating and $65 price target for WWE and said the Peacock deal has brought some much-needed long-term visibility to the company’s financials.

“With the licensing of the WWE Network to NBC Universal's Peacock SVOD service, the company's financials are becoming much more predictable over the next few years as this agreement combined with current TV rights fees should account for roughly 70% of overall revenue,” Handler said.

He said new sponsorship and advertising deals and international expansion are among the potential growth drivers for WWE moving forward. Handler is also projecting WWE will have one pay-per-view event in Saudi Arabia in 2021, which he said would rank up with WrestleMania as one of the company’s most lucrative events of the year.

Bear Case: In February, CFRA analyst Tuna Amobi downgraded WWE from Hold to Sell and cut his price target from $55 to $45. In a note, Amobi said WWE will likely be dealing with costs associated with its transition to Peacock in the near term. In addition, it will likely be a long time until WWE’s live event revenue returns to pre-pandemic levels.

“Our outlook reflects the benefit of new multiyear domestic television distribution agreements for the core franchises (Raw and SmackDown) plus international licensing revenues versus relatively stagnant growth in ancillary advertising/sponsorships,” Amobi said.

CFRA is projecting 14% revenue growth for WWE in 2021 and 11% revenue growth in 2022.
Benzinga’s Take: The second quarter of 2021 will be the first full quarter of results for WWE now that the WWE Network is exclusively on Peacock. Investors should think of the second quarter as potentially the new baseline they can use to judge future growth.

Photo credit: Ed Webster, Flickr

Latest Ratings for WWE

DateFirmActionFromTo
Apr 2021Morgan StanleyMaintainsEqual-Weight
Feb 2021Morgan StanleyMaintainsEqual-Weight
Feb 2021NeedhamMaintainsBuy

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