On Monday, Roth/MKM maintained a Buy rating on TKO Group Holdings (NYSE: TKO) and increased the price target to $130 from $121 for the shares. The adjustment follows the latest developments in the ongoing class action lawsuits involving UFC, which TKO Group Holdings owns. The resolution of the $335 million settlement agreement between UFC and the plaintiffs has become uncertain, causing concerns for TKO Group's stock performance.
U.S. District Judge Richard Boulware has not yet approved the settlement, which was discussed at a preliminary hearing on July 12. The judge expressed several issues, including the 45-day opt-out period for class members, potential conflicts between the two class action lawsuits, and the calculation of monetary damages. The lack of approval has introduced a new element of risk for the company's shares.
The possibility of the case going to trial was highlighted as a concern, as it could delay any potential payouts to plaintiffs and prolong the legal proceedings for years. The situation suggests that the judge may be looking for a higher settlement amount before signing off on the agreement.
The analyst from Roth/MKM pointed out that while the uncertainty surrounding the settlement creates a near-term overhang for TKO Group's shares, it seems unlikely that the judge would want to place plaintiffs in a riskier situation by pushing for a trial. The expectation is that a higher settlement figure might be required for the judge's approval.
The outcome of the class action lawsuits and the settlement discussions are being closely watched by investors, as they could have significant financial implications for TKO Group Holdings. The company's stock performance in the near term is likely to be influenced by the developments in this legal matter.
In other recent news, TKO Group Holdings has been the focus of several key developments. The company reported record-breaking attendance and revenue figures for its UFC and WWE events in the first quarter of 2024.
In a strategic effort, TKO merged its UFC and WWE Live Events teams into a single unit, the TKO Live Events Strategy Team, to strengthen its position in the live events market.
In the realm of analyst notes, Redburn-Atlantic initiated a 'Buy' rating on TKO stock, citing the increasing value of sports rights and TKO's potential in upcoming rights negotiations. TD (TSX:TD) Cowen upgraded TKO's stock rating from 'Hold' to 'Buy' following strong first-quarter earnings, setting a new price target at $127.
Similarly, Roth/MKM raised TKO's share price target to $121 from $112, maintaining a 'Buy' rating due to robust first-quarter performance and increased full-year guidance.
MoffettNathanson also revised TKO Group's price target, increasing it to $98 from the previous $90, while maintaining a Neutral outlook on the stock. These recent developments reflect a positive outlook for TKO Group Holdings in the investment community.
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