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Endeavor Group shares downgraded at Seaport Global amid privatization deal

EditorIsmeta Mujdragic
Published 04/03/2024, 08:10 AM

On Wednesday, Seaport Global Securities adjusted its rating on Endeavor Group Holdings Inc (NYSE:EDR), moving from "Buy" to "Neutral" in response to the company's forthcoming privatization by its majority owner, Silver Lake. The buyout offer, set at $27.50 in cash per share, falls short of Seaport Global's previous price target of $29.

The analyst from Seaport Global noted that the privatization announcement did not come as a surprise, as the majority of shareholders have already given their approval to the transaction. With no further minority shareholder approvals necessary and no expectation of an increased offer, the analyst justified the downgrade, citing the proximity of the offer price to the current trading levels.

The closing of the deal is anticipated in the first quarter of 2025, and the current trading price is approximately 6% above the offer price. This slight premium is expected to diminish gradually over the nine-plus months leading up to the deal's finalization.

In the meantime, Seaport Global suggests that the approximately 1% dividend yield could serve as a modest benefit for those investors who decide to retain their shares until the transaction is completed. The firm's stance reflects a neutral position on the stock, with limited upside potential from the current market price to the agreed privatization price.

InvestingPro Insights

As Endeavor Group Holdings (NYSE:EDR) approaches its privatization, investors may find value in examining the company's financial health and market performance. According to InvestingPro data, Endeavor is trading at a P/E ratio of 21.76, which is considered low relative to its near-term earnings growth. This could indicate that the stock is undervalued based on its earnings outlook. Additionally, Endeavor's strong revenue growth of 13.14% in the last twelve months as of Q4 2023, coupled with a 25.57% quarterly revenue growth, reflects a robust expansion in its business.

InvestingPro Tips highlight that Endeavor operates with a moderate level of debt and its liquid assets exceed short-term obligations, which suggests financial stability. Moreover, the company has been profitable over the last twelve months and analysts predict it will remain profitable this year. Despite trading at high EBIT and EBITDA valuation multiples, Endeavor's stock has experienced a large price uptick over the last six months, indicating positive investor sentiment.

For investors looking for more in-depth analysis and additional tips, InvestingPro offers a comprehensive suite of tools and metrics. There are 9 additional InvestingPro Tips available for Endeavor Group Holdings, which can be accessed by visiting: https://www.investing.com/pro/EDR. To enhance your investing strategy further, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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