Before the merger that created TKO, WWE traded as a volatile stock driven largely by media rights renewals, though its underlying value increased steadily over time, Wolfe said. Since TKO’s first full quarter as a combined company in late 2023, the shares have risen about 273%.
The brokerage said earlier investor concerns around television ratings, pay-per-view demand, media rights appetite, cash flow conversion and legal risks have largely been resolved. As a result, the company now trades at about 20 times next-twelve-month EBITDA, compared with roughly 12 times shortly after its first results as a merged company.
Wolfe said the market now broadly recognizes the strength of TKO’s franchises, along with pricing power and potential margin expansion.
The analysts said that leaves little room for further multiple expansion. The stock currently trades at about 26 times estimated 2027 free cash flow per share, a premium to comparable companies, which Wolfe said already reflects the likelihood that TKO could outperform consensus estimates.
source https://www.investing.com/news/stock-market-news/wolfe-downgrades-tko-after-strong-rally-4544908
