CORRECTED-WWE's next battle royale: Investor fans vs shorts

 (Corrects spelling in paragraph 21 to Knicks not Nicks)
    By Sinéad Carew
    March 28 (Reuters) - A brawl between World Wrestling
Entertainment Inc's         bears and bulls could reach a peak
this year as the company renegotiates overseas contracts. 
    While a large contingent of short sellers have been betting
that the stock will fall, WWE's most ardent Wall Street fans say
it will continue to rise even after outperforming the stock
market last year and for much of 2019.
    Shares in WWE soared 144 percent in 2018 as U.S. TV license
deals that blew past analyst expectations with a 3.6-times hike
in average annual value from its previous agreements. 
    The stock has risen another 13.6 percent so far this year as
investors are betting on license renewals being negotiated in
countries including India and the United Kingdom, which WWE
expects to announce by mid-year. 
    Ten out of 13 analysts have buy ratings on the stock while
three recommend holding the stock which last traded at $84.87.
The mean share price target is $102.70 with the highest target
at $157 and the lowest at $85, according to Refinitiv.
    While the stock has already risen a lot on expectations for
new business, Gabelli Funds analyst Alexandra Cowie says it
still has room to gain further. 
    "I wouldn't be selling before the contract news. Going in
and coming out of announcements, it gets a double bump," said
Cowie, whose firm owns more than 174,000 WWE shares.    
    WWE is in an unusual entertainment category. Unlike
traditional sports, its fights are scripted, but analysts
measure its popularity against sports because it still involves
athleticism and suspense.
    The creator of Smackdown and Raw TV shows boasted a U.S.
cable television viewership second only to the National Football
League in 2018, according to Nielsen data. And in India, WWE
viewership was second only to cricket, according to the
Broadcast Audience Research Council.
    Guggenheim analyst Curry Baker expects a U.K. renewal
similar to WWE's current contract there. But he anticipates a
five-fold boost to its average annual revenue in India to $124
    "The market is underappreciating the India opportunity,"
said Baker who has a $105 price target and a buy rating on WWE.
    MKM analyst Eric Handler, who raised his price target for
the stock to $110 from $95 on Tuesday, says a possible U.S. deal
for a third weekly hour of Smackdown could add $50 million to
annual revenue. The company declined to comment on the prospect
of an additional hour.   
    WWE shares have fallen 7.9 percent since Thursday. On
Wednesday, Chief Executive Vincent McMahon sold 3.2 million of
his shares, or four percent of WWE's shares outstanding, to fund
a separate entity.              
    It also came under pressure as the broader market has been
losing ground on worries about global economic growth. But
analysts say WWE contracts - which are for around three to five
years - provide some insulation against economic fluctuations. 
    In the United States, live sports have been a key draw for
cable TV subscribers, at a time when many consumers are cutting
the chord to avoid high monthly fees.    
    "It feels like one of the lower-risk higher-return names in
the media space," said Baker.
    Still, about 17 percent of WWE's float is sold short,
according to data from S3 Partners which estimates short seller
mark-to-market losses of $359 million since the start of 2018. 
    The bets against the stock can be partly attributed to
hedging by investors in its convertible bonds due in 2023,
according to BTIG analyst Brandon Ross. “That’s contributed to
it,” he said.
    Wolfe Research analyst Marci Ryvicker, is Wall Street's
biggest fan, with a price target of $157. 
    Wall Street expects 2020 earnings before interest, tax,
depreciation and amortization (EBITDA) of $460.59 million on
$1.33 billion revenue, according to Refinitiv data. Ryvicker
expects EBITDA of $510 million on revenue of $1.423 billion. 
     With this in mind, Ryvicker says WWE looks cheap compared
with other sports peers, including Knicks basketball team owner
Madison Square Garden Co         and a Liberty Media Corp
subsidiary which owns Formula One rights           and Liberty's
subsidiary that owns the Atlanta Braves           baseball team.
     WWE's enterprise value is roughly 14.8 times her 2020
EBITDA estimates compared with multiples of 32 for Madison
Square Garden, 33.2 for Liberty's Atlanta Braves subsidiary and
12.6 for the Formula One subsidiary, the analyst wrote.  
     WWE "has no reason not to trade right in-line with its
closest peers," Ryvicker said. 

 (Reporting by Sinead Carew;
Additional reporting by Sudipto Ganguly in Mumbai, Lewis
Krauskopf, Lance Tupper and Chuck Mikolajczak in New York;
Editing by Alden Bentley and Lisa Shumaker)