Bank of America (BoA) Securities analysts view Endeavor Group Holdings Inc (EDR) as an “entourage” of highly attractive assets that each, individually, have exposure to favorable secular tailwinds within the media and entertainment industry.
In an update to clients, they noted that Endeavor will own 51% of the proposed merger between UFC and WWE, which will be named TKO Holdings Group, and they believe there is a significant disconnect between the value public markets are ascribing to EDR's asset base compared to what public/private transactions would suggest EDR's assets are worth.
"The announcement of share repurchases, the commencement of a dividend, continued de-levering as well as the recent IMG sale and UFC/WWE deal are all strong signals that management is committed to driving shareholder value," the analysts wrote.
They also see several catalysts ahead over the next 12 months to drive its share price higher, including the closing of the TKO transaction; initiation of capital returns (potentially accelerated by TKO free cash flow generation); updates on media rights for WWE/UFC; a potential resolution to the various strikes, and; the Paris Olympics in 2024.
"We believe TKO reflects an opportunity to own a quasi-sports league with robust year-round programming, and an attractive financial profile that offers sizable revenue/cost savings," analysts at BofA Securities added.
They reiterated their ‘Buy’ rating a $32 price objective on Endeavor Group stock.
Shares of Endeavor Group holdings rose 1.6% to $24.04 in late-afternoon trading on Monday and have gained 14% year to date.
Contact Sean at sean@proactiveinvestors.com