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NEW YORK (AP) — Shares of World Wrestling Entertainment climbed more than 4 percent on Thursday, after an analyst lifted his rating and price target for the producer of wrestling events and television shows, saying there appears to be increasing fan interest.
THE SPARK: Richard Ingrassia of Roth Capital Partners raised WWE to "Buy" from "Neutral" and increased his price target on the stock to $12 from $10.
THE ANALYSIS: Ingrassia said in a client note that pay-per-view buy rates for non-Wrestlemania events increased 37 percent in the second quarter, the first meaningful improvement in the figure in four years.
The analyst says that the company is also going to have more hours of its television programming on basic cable as it is launching a new one-hour show called WWE Main Event, and its Monday Night Raw program will expand from two hours to three hours. The company also debuted WWE Saturday Morning Slam five days ago.
He credited WWE's use of social media for marketing as helping to drive increased interest in all of its revenue categories. The analyst also noted that the company is moving away from money-losing self-produced films, which have resulted in significant writedowns, and is preparing its first licensed and distributed direct-to-video release by the end of the year. It has deals with several production companies for upcoming films.
WWE also has plans to launch its own network, which Ingrassia projects could add $68 million to 2013 revenue.
SHARE ACTION: World Wrestling Entertainment Inc.'s stock rose 37 cents, or 4.4 percent, to $8.71 in midday trading. The shares have traded in a 52-week range of $7.44 to $10.80.