Last week, you might have seen that TKO Group Holdings, Inc. (NYSE:TKO) released its full-year result to the market. The early response was not positive, with shares down 2.4% to US$83.73 in the past week. Revenues fell badly short of expectations, with revenue of US$1.7b missing analyst predictions by 37%. Statutory earnings correspondingly nosedived, with TKO Group Holdings reporting a loss of US$0.43 per share, where the analysts were expecting a profit. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the most recent consensus for TKO Group Holdings from twelve analysts is for revenues of US$2.65b in 2024. If met, it would imply a substantial 58% increase on its revenue over the past 12 months. Earnings are expected to improve, with TKO Group Holdings forecast to report a statutory profit of US$2.47 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$2.79b and earnings per share (EPS) of US$3.62 in 2024. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a pretty serious reduction to earnings per share estimates.
The analysts made no major changes to their price target of US$108, suggesting the downgrades are not expected to have a long-term impact on TKO Group Holdings' valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on TKO Group Holdings, with the most bullish analyst valuing it at US$125 and the most bearish at US$92.00 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analysts are definitely expecting TKO Group Holdings' growth to accelerate, with the forecast 58% annualised growth to the end of 2024 ranking favourably alongside historical growth of 17% per annum over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 7.8% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that TKO Group Holdings is expected to grow much faster than its industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for TKO Group Holdings. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple TKO Group Holdings analysts - going out to 2026, and you can see them free on our platform here.
It might also be worth considering whether TKO Group Holdings' debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.