The Pro Wrestling Post: Analyst upgrades WWE stock

September 3, 2012

The WWE saw a bump in its stock price late last week after Richard Ingrassia of Roth Capital Partners upgraded its stock from a “Neutral” to a “Buy” and raised the stock price from $10 to $12.  As a result, WWE’s stock saw an increase of 4 percent late last week.

The analyst cited a rise in non-Wrestlemania PPV buys, the creation of more content on cable television, it’s social media presence, the retooling of the WWE Film division and the inevitable WWE Network as reasons to upgrade the company’s stock.

The WWE ended last week up slightly at $8.88.

(H/t Bloomberg)

Payout Perspective:

An interesting analyst analysis and the reasons for the positive upgrade are items that have been discussed in WWE earnings calls.  However, most of these issues (e.g. WWE Films, WWE Network) have been seen as more of a burden than a benefit.  For instance, Ingrassia projects that the WWE Network should add $68 million to the company in 2013.  But, this assumes that the WWE is able to organize in time for the new year despite the fact that the WWE Network was to launch the day after Wrestlemania 28 this past spring.  Furthermore, no plan has been discussed about how the WWE would be distributed.  We need only to the ongoing battle between the Pac 12 Network with Direct TV and other distributors as a reason to be concerned about the network’s distribution.

Another note, the analyst upgrade does not address the company’s recent investment in social messaging startup Tout.  How does that help or hurt the WWE stock?

While the upgrade is good for the WWE shareholders, the reasons for the positive spin leave an investor wanting to know more.

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