KeyBanc Expects Another Solid Quarter, Network Growth From WWE

After a huge 2018, one Wall Street analyst said Wednesday 2019 will be another big year for World Wrestling Entertainment, Inc. (NYSE: WWE).

The Analyst

KeyBanc analyst Evan Wingren reiterated his Overweight rating and $104 price target for WWE.

The Thesis

Wingren said KeyBanc’s latest proprietary data suggests the WWE Network is on track for another quarter of subscriber growth in-line with consensus expectations. KeyBanc expects WWE to add about 7,000 subscribers in Q4, up 3.2 percent. That number would bring the total subscriber count to about 1.56 million, on par with company guidance.

Beyond Q4 earnings, Wingren said WWE has several key catalysts coming up in 2019 that should propel the stock higher. There’s been no new news on WWE’s U.K. TV deal renewal or the India TV renewal, both expected to happen in the first half of 2019.

“International renewals in several countries, new content opportunities, and digital subscriber growth can continue to drive guidance higher, while its multiple has potential to move higher as the Company gives more commentary on investment in 2019 and beyond,” Wingren wrote in the note.

Wingren said the WWE brand remains very healthy, and a 6 percent decline in linear U.S. TV viewership for “Monday Night Raw” implies share gains in a secularly declining linear market. He said AVOD consumption is accelerating, and 2019 OIBDA guidance of $200 million is likely on the conservative side.

Even after the huge 2018 gains, Wingren said WWE stock still has upside trading at only about 15 times KeyBanc’s 2020 OIBDA estimates.

Price Action

WWE stock is off to another hot start to 2019, up 7.1 percent so far in January. Shares treaded at $80.67 Wednesday morning.

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Photo credit: Miguel Discart, Flickr