The tale of the tape for UFC promoter TKO Group (NYSE:TKO) isn’t looking good. At least, as long as it’s TD Cowen that’s holding the measuring tape. In fact, TKO plunged over 5.5% in the closing minutes of Friday’s trading. A combination of factors is likely to hit TKO Group hard, noted TD Cowen via analyst Stephen Glagola. Glagola recently launched coverage of TKO Group with a Hold rating and a price target of $92. But with that statement of at least marginal confidence came a few caveats.
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Glagola pointed out that TKO Group was susceptible to class-action lawsuits connected to the UFC and any trouble over media rights renewals. While TKO Group has a slate of competitive advantages connected to it, those same advantages have, ultimately, produced “longer-term business model risk.”
Cracks Appear in the Superstructure
Indeed, there are some potential problems ahead for TKO Group. With an antitrust lawsuit featuring 1,200 fighters coming up on April 8, the problems could hit sooner than anyone expected. With the lawsuit’s outcome also breeding no small amount of uncertainty, that’s likely to also hurt TKO Group’s ability to draw in investors. Throw in some sluggish macroeconomic conditions that will likely keep some people away from live events and paying for pay-per-view passes, and TKO Group’s prospects look a little shaky.
Is TKO Stock a Good Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on TKO stock based on three Buys assigned in the past three months, as indicated by the graphic below. After a 25% loss in its share price over the past six months, the average TKO price target of $101.50 per share implies 31.73% upside potential.
