Netflix may have surged 110 percent so far this year, but World Wrestling Entertainment (WWE) has been giving the streaming giant a run for its money and market watchers believe the stock will continue to clean house.
Shares of WWE rallied 3 percent Friday as Morgan Stanley raised its price target on the stock to $100 from $58. As WWE was trading around $76 on Friday morning, this means that analysts are predicting another 30 percent upside for the name.
Oppenheimer technician Ari Wald is also bullish on WWE and believes the stock is about to soar even higher than the 152 percent it has already surged this year.
“This is a great example of momentum in markets,” he said Thursday on CNBC’s “Trading Nation.” “All of the academic research shows that stocks with high risk-adjusted returns over the previous year usually continue to be the leaders over the coming year, and we like momentum.”
While Wald does describe WWE as “stretched and a bit extended off its moving averages,” he does emphasize that the same momentum he sees will carry the stock higher.
“I think if you’re in it, you stick with it,” he added. “Speaking in terms of trading levels we see near-term support at the stock’s late June gap at around $68.”
Mark Tepper, CEO of Strategic Wealth Partners, also believes WWE rules the ring where individual stock names are concerned, especially given the fundamental story behind the stock.
“They’ve been focusing on increasing original content, growing their subscriber base, [and] negotiating new TV deals which all really bode well for the stock,” Tepper said on “Trading Nation.” “While the media and entertainment industry is really competitive, they’ve really got the wrestling niche obviously locked down. So I find it really hard to believe that any other wrestling entertainment company could enter this market and compete.”
On top of that, Tepper points to the company’s upcoming broadcast deals with Fox and Comcast as big tail winds for the stock, projecting a 360 percent growth for WWE’s business.
However, Tepper cautions that as great as these fundamental tail winds may be, they may already be priced in and the stock’s rally could hit a standstill.
“I think at a forward PE at 380 all of this good news is really already priced in,” he said. “So for us, it’s just tough to justify buying any new positions in this stock at this point right here.”
Since the TV deals with Fox and Comcast were announced on June 26, WWE has rallied 14 percent.
Disclosure: Comcast is the owner of NBCUniversal, parent company of CNBC and CNBC.com.
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