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Citi cuts Endeavor Group rating to neutral, lowers price target

EditorNatashya Angelica
Published 15/04/2024, 21:36

On Monday, Citi downgraded shares of Endeavor Group Holdings Inc (NYSE:EDR), moving the rating from Buy to Neutral. This adjustment was accompanied by a reduction in the stock price target to $27.50 from the previous $29.00. The downgrade follows the announcement of Endeavor's acquisition agreement on April 2, 2024, by an investor group led by Silver Lake.

The agreement stipulates a purchase price of $27.50 per share for Endeavor. In light of this development, Citi has revised its outlook on the company, citing the acquisition as the primary reason for the change in rating and price target.

The analyst from Citi expressed confidence in the deal's completion without anticipating any significant obstacles or the emergence of a higher bid for Endeavor.

The transaction is expected to proceed as planned, with the agreed terms reflecting the new price target set by Citi. The analyst's statement noted the lack of risks to the deal's closure and the unlikelihood of a competing offer that could potentially alter the acquisition's dynamics or valuation.

Endeavor Group Holdings, which operates in the entertainment, sports, and content sectors, is poised to transition to new ownership under the terms of the acquisition. The market is now observing how the deal unfolds, with the current share price aligning with the analyst's revised target.

The financial community will be watching closely for any further developments as Endeavor Group Holdings approaches the completion of its acquisition by Silver Lake and its partners. The new Neutral rating reflects a shift in investment outlook following the announcement of the impending change in company ownership.

InvestingPro Insights

In light of Citi's recent downgrade of Endeavor Group Holdings Inc (NYSE:EDR), investors may find additional context in the company's recent performance and market position.

Endeavor's current market capitalization stands at $12.33 billion, with a P/E ratio of 22.18, indicating a valuation that some may consider reasonable relative to near-term earnings growth. This aligns with an InvestingPro Tip highlighting that the stock is trading at a low P/E ratio in comparison to its earnings growth potential.

Furthermore, the company's revenue growth has been robust, with a 13.14% increase over the last twelve months as of Q1 2023, and a significant quarterly growth of 25.57% in Q1 2023. The gross profit margin has remained strong at 59.03%, demonstrating the company's ability to maintain profitability. These metrics suggest a solid financial foundation as Endeavor approaches its acquisition by Silver Lake.

Moreover, an InvestingPro Tip indicates that the stock is trading near its 52-week high, currently at 99.7% of this peak, which may reflect investor optimism about the acquisition's potential value.

For those interested in deeper analysis, there are 6 more InvestingPro Tips available that could provide further insights into Endeavor's financial health and market position. For exclusive access to these tips, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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