World Wrestling Entertainment Inc. shares surged 8.9% Tuesday to its highest level in nearly four years as Wall Street analysts defended its deal with Endeavor Group Holdings Inc.’s mixed martial arts league, Ultimate Fighting Championship.
(Bloomberg) — World Wrestling Entertainment Inc. shares surged 8.9% Tuesday to its highest level in nearly four years as Wall Street analysts defended its deal with Endeavor Group Holdings Inc.’s mixed martial arts league, Ultimate Fighting Championship.
The jump was a rebound from a day earlier, when the entertainment company stock ended Monday 2% lower, following the $9.3 billion deal to be bought by Endeavor.
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“We have a positive view of the WWE/UFC combination and look for value accretion to unlock faster than if WWE remained a standalone company,” Roth MKM analyst Eric Handler wrote in a note. He reiterated his buy rating on shares and boosted his price target to $106 from $96, implying a nearly 19% upside from Monday’s close.
Citi and BofA Securities also defended the deal.
“We maintain our buy rating on WWE as we expect investors to shift their focus to the US rights renewal,” analyst Jason Bazinet wrote in a note.
Endeavor shares also regained lost ground — the stock gained 2.4% Tuesday after falling nearly 6% a day earlier.
The combination of the two companies has “knockout potential” that should drive long-term shareholder value, BofA analyst Jessica Reif Ehrlich said in a note reiterating her buy rating on Endeavor.
“We believe the new company would have an attractive financial profile warranting a premium to the media and entertainment companies under our coverage,” she wrote.
To be sure, not all analysts are sold on the deal. Early Tuesday, Benchmark downgraded shares of WWE to hold from buy saying that Endeavor’s valuation of the new entity “could be aggressive.”
(Updates for market close, adds BofA analyst comment.)
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