UFC and William Morris are strong assets, but Endeavor stock’s 26% gain since its IPO leaves analysts wary The Ratings Game

Ciara Linnane

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“We see attractive but lower growth and lower [return on invested capital] live events and marketing agencies for the remaining businesses at Endeavor,” said the analyst.

Morgan Stanley started coverage of Endeavor’s stock with an equal-weight rating and $30 price target.

UBS also launched coverage with a neutral rating and set a share-price target of $33.

Jefferies took a more bullish stance, initiating coverage with a buy rating and a $40 price target with an upside scenario of $50.

Endeavor is a media powerhouse, “ with the wide-reaching spokes of its content flywheel (e.g . sports ops & advisory, events & experiences management, media production & distribution, client representation, brand licensing, experiential marketing) unlocking monetization opportunities for clients & owned assets (e.g. UFC),” said analysts Randal J. Konik and Anna Glaessgen, who also highlighted the scarcity value that makes UFC attractive.

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UFC has more followers than the NFL, they wrote in a note to clients.

“Plus, this asset demonstrates the full utilization of the platform; Endeavor benefits from representing fighters, marketing and licensing deals, event management, and [direct-to-consumer] distribution such as UFC Fight Pass,” they wrote.

Endeavor’s IPO documents showed its net loss widened to $625 million in 2020 from $530.7 million in 2019, while revenue shrank to $3.479 billion from $4.571.0 billion.

Endeavor shares were down 3.7% on Monday but are up about 5% this month, while the Renaissance IPO ETF /zigman2/quotes/207665280/composite IPO +4.82% has fallen 4.9% and the S&P 500 /zigman2/quotes/210599714/realtime SPX +3.06% has gained 0.5%.