Pivotal Research Starts TKO Group Holdings (TKO) at Buy

Pivotal Research analyst Jeffrey Wlodarczak initiates coverage on TKO Group Holdings (NYSE: TKO) with a Buy rating and a price target of $170.00.

The analyst comments: "TKO is the product of the 9/23 merger of UFC and WWE, controls the fast-growing Ultimate Fighting Championships (UFC) sports property and Worldwide Wrestling Entertainment (WWE) sports entertainment property. TKO represents a unique asset with clear strong revenue growth opportunities primarily on likely materially higher media rights fees (65% of revenue) driven by the aggressive entrance of large cap tech players into bidding on sports rights, higher event revenue (boosted by an increasing focus on location site fees), currently under-monetized advertising/sponsorship and new potential revenue streams (gambling /digital/expanded S-VOD). This combined with cost cutting efforts should drive a ~15% EBITDA growth CAGR ('24-'27) and enhanced by low capex requirements/buybacks materially faster free cash flow per share growth. Barring an acquisition (MotoGP in the unlikely event FWONK's (BUY) deal does not pass regulatory hurdles as an example) we expect the company to use its healthy free cash flow to aggressively retire shares. We value TKO using a discounted cash flow methodology [8% discount rate and 17X '27 terminal EBITDA a moderate discount to our FWONK (BUY) 20X terminal EBITDA assumption] to arrive at our $170 YE'25 target price."

For an analyst ratings summary and ratings history on TKO Group Holdings click here. For more ratings news on TKO Group Holdings click here.

Shares of TKO Group Holdings closed at $114.99 yesterday.

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