Entertainment

Endeavor Stock Upgraded by Morgan Stanley Thanks to UFC – The Hollywood Reporter

On Wednesday, Morgan Stanley upgraded Endeavor to overload and set a new price target of $40 per share.

The financial firm’s optimism over Endeavor stems from its ownership of the UFC, which Morgan Stanley expects significant growth in the coming years, as well as its WME talent agency, which is positioned positioned to create a slice of the booming market for streaming content. Endeavor stock has been trading just above $30 in recent days.

“The investment upsides for Endeavor are increasingly clear in our view – the value of premium content in the marketplace continues to grow as major platforms compete to capture audiences around the world ,” wrote Morgan Stanley’s Benjamin Swinburne in the company’s 2022 market outlook. “Endeavor’s two biggest assets – UFC and talent agency WME will directly benefit from these trends and together represent ~70% of segment-adjusted EBITDA by 2022.”

And while Endeavor must sell its majority stake in Endeavor Content to South Korea’s CJ ENM, Morgan Stanley writes that “selling its Endeavor Content business will help reduce the path towards debt forgiveness, improving long-term cash conversion and will help reassess the talent business reported in the Representative segment. ”

Regarding the UFC, the finance company thinks the combat sports company will be able to significantly grow both its media rights revenue and its sponsorship revenue in the coming years. Swinburne writes: “As a relatively nascent sport compared to others, we see a long way to increase engagement globally, which will translate into higher scarcity value for broadcasters and streaming platforms.

Endeavor, led by CEO Ari Emanuel, has had a hugely successful 2021, going public in an IPO in April and recalibrating its message to Wall Street to emphasize its business. their own sports (like UFC) and live events. The company has also continued to acquire companies (this month it announced a new subsidiary that will own and operate minor league baseball teams) and is stepping up its betting business. sports through the $1.2 billion acquisition of OpenBet. The company said on its last earnings call that it will separate sports betting into its own segment in 2022.

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