Endeavor Group Holdings Inc.

Endeavor Group Holdings Inc. (NYSE: EDR) is a sports and entertainment conglomerate based in the United States. The company owns and runs premium sporting franchises, such as the Ultimate Fighting Championship (UFC), as well as producing and distributing sports and entertainment content. The firm also owns and operates live events, as well as representing elite sports and entertainment talent and blue-chip corporate customers. Owned Sports Properties, Events, Experiences & Rights, and Representation are the company's segments.

Key Highlights

• On May 12, 2022, Endeavor Group Holdings, Inc. released its financial results for the quarter ended March 31, 2022, where the company's ability to respond to high demand for premium content and live events drove growth in the first quarter and has raised guidance for the fourth quarter in a row to reflect the company's positive outlook for the rest of the year.
• On May 31, 2022, Endeavor Group Holdings, Inc. announced that President Mark Shapiro will participate in a virtual fireside chat on Tuesday, June 14, 2022, at 1 p.m. PDT, at the Credit Suisse 24th Annual Communications Conference.

Important financial highlights from Q1 FY22 Financial result

• Revenue from the Owned Sports Properties category was USD 296.7 million for the quarter, up USD 13.2 million or 5% from the first quarter of 2021. Greater sponsorship, licensing, commercial PPV, and event-related revenue drove the increases for UFC. The segment's Adjusted EBITDA for the quarter was USD 148.7 million, up USD 3.2 million, or 2%, year over year, reflecting the negative impact of offseason operational expenditures connected with Diamond Baseball Holdings.
• The Events, Experiences, and Rights sector generated USD 825.8 million in sales for the quarter, up USD 286.2 million or 53% from the first quarter of 2021. The return of more full-capacity live events in the quarter compared to the first quarter of 2021, such as Super Bowl LVI, the Miami Open, the NCAA Final Four, and Frieze LA, as well as USD 38 million in revenue from the acquisition of NCSA, which closed in Q2 2021, were the main drivers of the increases. Adjusted EBITDA for the quarter was USD 132.5 million, up USD 93.4 million or 239 percent year over year.
• Revenue from the representation division was USD 357.3 million for the quarter, up USD 108.4 million or 44% from the first quarter of 2021. Increased brand expenditure, as well as greater commissions due to sustained strong demand for our talent and the resurgence of live entertainment, mainly music and comedy touring, drove the company's growth. Adjusted EBITDA for the quarter was USD 101.7 million, up USD 40.2 million, or 65 percent, year over year.
• Cash and cash equivalents totaled USD 2.030 billion on March 31, 2022, compared to USD 1.561 billion on December 31, 2021. On March 31, 2022, the total debt was USD 5.704 billion, up from USD 5.714 billion on December 31, 2021.
• The Full-year 2022 revenue guidance raised to USD 5.235 billion – USD 5.475 billion; Adjusted EBITDA guidance raised to USD 1.1 billion – USD 1.15 billion

Stock recommendation

EDR's stock price has correct 20.17% in the past six months and is currently leaning towards the lower side of its 52-week range of USD 17.42 to USD 35.29. As can be seen in the chart below, the price is currently below both short-term (50-day) SMA and long-term (200-day) SMA, and RSI is at 58.54. Short-term SMA has in the past acted as great resistance for the price and as of now, the price is approaching the short-term SMA from below. Therefore, the price action after reaching a short-term SMA will decide the future path for the stock.

Given the stock's considerable recovery in the month of May 2022, financial results, and technical analysis, we propose a "Watch" rating on the stock at its closing price of USD 23.50, as of June 2, 2022, with further analysis after price’s reaction towards shorter-term SMA.

One Year Technical Chart, as of June 02, 2022. Data Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary

* Closing price as of June 02, 2022.

Investors can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and the uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavorable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decisions should be made depending on the investors' appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above. 

Note 3: The report publishing date is as per the Pacific Time Zone.