On Wednesday, Citi updated their stance on TKO Group Holdings (NYSE: TKO), increasing the price target to $137 from the previous $130 while reaffirming a Buy rating on the stock. This adjustment comes in response to the company's second-quarter financial performance, which surpassed Wall Street's expectations, and an improved forecast for the full year.
TKO Group reported higher-than-expected revenue and adjusted EBITDA for the second quarter of 2024, leading to an upward revision of their full-year guidance for both metrics. In light of these results, Citi has made corresponding updates to their financial model for TKO Group.
The firm's revised estimates for the company's revenue and adjusted EBITDA for the years 2024 through 2026 have increased by approximately 2%. This optimistic adjustment is reflected in the new price target of $137, up from the former target of $130.
Citi's analysis indicates confidence in TKO Group's financial trajectory following the reported quarterly results. With the maintained Buy rating, the investment firm signals its positive outlook on the stock's potential performance in the market.
In other recent news, TKO Group Holdings has been the focus of numerous analyst upgrades and downgrades. BofA Securities reinstated its Buy rating and set a new price target of $140, highlighting the company's impressive performance, largely attributed to the strength of sports rights.
TD Cowen also showed confidence in TKO Group, adjusting the stock's price target upward to $140 from the previous $127, while maintaining a Buy rating. This decision followed TKO's recent financial performance that outpaced expectations.
Jefferies maintained a Buy rating on TKO Group and increased the price target to $150, signaling another strong quarter. The firm's revenue and adjusted EBITDA surpassed consensus expectations, underpinned by strong demand for live events, particularly noting the UFC and WWE's impressive performances.
On the legal front, TKO Group is facing a setback in a proposed $335 million class-action lawsuit settlement involving former UFC athletes. The court denied preliminary approval, delaying the resolution and prompting TKO to explore other options, including a possible appeal and separate settlement talks. Despite these challenges, Citi maintains a Buy rating on TKO, suggesting a possibility for a new settlement before the trial date.
In terms of company news, TKO Group reported strong earnings, surpassing consensus expectations, and record-breaking attendance and revenue figures for its UFC and WWE events in the first quarter of 2024. The company also made strategic moves to consolidate its market position by merging its UFC and WWE Live Events teams into a single unit, the TKO Live Events Strategy Team.
InvestingPro Insights
Following Citi's updated stance on TKO Group Holdings, a look at the real-time data from InvestingPro provides additional context for investors considering the stock. The company's market capitalization stands at a robust $20.43 billion, a testament to its significant presence in the market. Despite the lack of profitability in the last twelve months, with a P/E ratio of -39.41, the revenue growth has been impressive, clocking in at 107.77% over the same period. This growth momentum is further evidenced by a staggering quarterly revenue growth of 178.9%.
InvestingPro Tips highlight that analysts are optimistic about TKO Group's future, expecting net income to grow this year. Additionally, they anticipate sales growth in the current year, aligning with the positive revenue trends observed. However, it's worth noting that two analysts have revised their earnings downwards for the upcoming period, which could be a point of consideration for potential investors. Moreover, the stock has been trading near its 52-week high, reflecting strong market sentiment and a significant return over the last month of 13.93%.
For those looking to delve deeper into TKO Group's prospects, there are 11 additional InvestingPro Tips available, which can provide a more comprehensive analysis of the stock's potential. With the next earnings date set for November 5, 2024, investors will be keenly watching for continued growth and profitability signals.
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