World Wrestling Entertainment, Inc. (NYSE:WWE) is a buy according to Wells Fargo (NYSE:WFC). In a new report, the financial institution said that investors “STILL” aren’t giving the sports entertainment promotion enough credit on Wall Street as there is a tremendous upside to the stock.
Wells Fargo Champions WWE
On Wednesday, Wells Fargo initiated coverage of WWE stock and slapped an Outperform rating. Moreover, analysts are placing a price target range of $22 to $24. This is a substantial increase as it has been trading between $15 and $17 per share in the past month.
The report states that analysts “really like” WWE’s current valuation and believe it could go up in the future. Although analysts project a 14 percent drop if the WWE Network can’t move beyond the one million break-even subscription number, it does note that the stock could soar to $37 to $52 if WWE garners between three and four million subscribers.
This would represent an increase of between 137 and 236 percent. In other words, if the stock can reach that high then it would be a WrestleMania main event win for investors (or perhaps a Royal Rumble win).
Of course, Wells Fargo can understand the level of apprehension because of two important reasons: first, it has gradually moved away from its lucrative PPV business model to start the over-the-top streaming service. Second, two important milestones had missed investor expectations, which prompted the stock to tumble by more than half since the Feb. 2014 launch of the network.
Nevertheless, Wells Fargo wrote that it “STILL” (sic) thinks investors aren’t adamant enough about WWE stock and its room for potential growth. WWE shares could start to grow once investors look at the 14 percent risk compared to the possible triple jump.
Wells Fargo isn’t the first organization to be optimistic on WWE stock. In June, BTIG Research initiated its coverage of WWE and labeled it with a “Buy.” Earlier this year, Benchmark upgraded its rating to a “Buy.” Zacks, meanwhile, forecast a short-term target price of $20.32.
Last week, The Street called WWE a “BUY”:
The company’s strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, increase in net income and good cash flow from operations. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.”
At the time of this writing, WWE shares are trading downwards at $15.44. Year-to-date, the stock is up about three percent.
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