Bernstein Lifts TKO Price Target to $240 on Positive 2027 Outlook

Bernstein has increased its price target for TKO Group Holdings (NYSE: TKO) to $240 from a previous $235, citing a positive long-term outlook for the parent company of UFC and WWE. The firm maintained its Outperform rating on the stock in a research note that offered a preliminary preview of the company's prospects for 2027.

Analyst's Thesis

Bernstein analyst Ian Moore described 2027 as a "pivotal year for TKO's operating leverage story" in the note. The analysis suggests that by this time, the major synergy phase following the merger will be largely complete, allowing top-line growth to flow through a more efficient corporate structure.

This leaner structure is projected to lift TKO's profit margins to a modeled 42% from a current 39%. The firm's estimates imply that EBITDA growth of approximately 9% is achievable, although it expects TKO management will likely guide more conservatively toward 7% to 8%, or about $2.45 billion.

Growth Drivers and Headwinds

Bernstein's bullish case centers on several key factors, while also acknowledging potential challenges.

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• High Margins: Growth from UFC and WWE is expected to carry high incremental margins of 80% to 90%.
• Key Revenue Streams: This growth is anticipated to be driven by media rights escalators and strong execution on new sponsorship deals.
• Sponsorship Opportunity: The note highlighted a clear path for the company's 2030 sponsorship target to be raised toward $1.3 billion to $1.4 billion.
• Potential Headwinds: The analysis also pointed to the possibility of muted growth from live events and a significant headwind of over $100 million for the IMG division as it laps major events like the Milan Olympics and the FIFA World Cup.

Valuation and Consensus

The new $240 price target reflects a valuation of approximately 21 times the firm's 2027 EBITDA estimate. According to the note, this target includes an additional $10 per share in value attributed to TKO's Zuffa Boxing venture.

Bernstein's forecast for 2027 sits $145 million above the current consensus estimates, positioning the firm on the more optimistic end of analyst expectations. The note referred to TKO as "the most controversial name in our coverage," reflecting market debate over its long-term growth potential.