Sports streaming potential makes company a buy.
Investment firm Rosenblatt started its coverage of World Wrestling Entertainment (WWE) on Wednesday, giving the sports and media firm a buy rating.
The rating was based on the company’s 30 percent drop since April, as well as the possibility of the company increasing its revenue going forward thanks to streaming channels for its wrestling coverage. Other analysts also have the company listed as a buy right now, with an average rating of outperform.
The initial rating came with a price target of $85, about a 28 percent increase from where shares traded on Tuesday. Shares rallied at the open, but declined with the overall selloff in the market.
Action to take: At 22 times forward earnings, the company looks a little pricey. And despite a recent 30 percent drop, shares are only off 15 percent in the past year. We think anyone looking to go long shares should wait until the price gets under $60, about another 10 percent lower from here.
Speculators may even want to buy a put option, to bet on shares continuing their downtrend in the coming months—a weak overall stock market may provide a better return. The January 2020 $55 puts look attractive here in terms of the potential return and relative cost—with the option under $3, it could rally to $5 or $6 in a steep market decline.