Monday, April 18, 2011

World Wrestling Entertainment Inc. (NYSE: WWE) Q2 2011 Price Target

Recent price: 11.25$
P/E Ratio: 15.86
3 Months Target Price: 14$

Company Description
Data provided by Reuters tells us that World Wrestling Entertainment, Inc. is an integrated media and entertainment company. The Company’s operation consists of four segments: Live and Televised Entertainment, Consumer Products, Digital Media and WWE Studios. Live and Televised Entertainment’s revenues consists principally of ticket sales to live events, sales of merchandise at these live events, television rights fees, sales of television advertising and sponsorships, and fees for viewing its pay-per-view and video on demand programming. Consumer Products revenues consist principally of the direct sales of WWE produced home videos and magazine publishing and royalties or license fees related to WWE themed products, such as video games, toys and books. Digital Media revenues consist principally of advertising sales on its Websites, sale of merchandise on its Website through its WWEShop Internet storefront and sales of broadband and mobile content. WWE Studios revenues consist of receipts from the distribution of filmed entertainment featuring its Superstars.

Confidence Margins
Strong resistance $16.59 (+47%)
Light resistance $14.10 (+25%)
Light support $11.19 (-1%)
Strong support $10 (-11%)

World Wrestling Entertainment Inc. has recently announced plans to cut and even probably suspend it's dividend, which currently standing at an impressive 12% yield. This company's stock is currently exploring a territory that has been untouched for the first quarter of 2009. This is a great buying opportunity, but it will have to be watched closely for it not to loose excess value.

Entry strategy
For the cautious investor:
Buy the stock for 12$ or less.

For the risk-taking trader:
The July 2011 12.50$ out-of-the-money call option contract seems to be the right position to take, they can be acquired for about 25$ per contract.

Exit Strategy
For the cautious investor:
Sell when the stock reaches 14$, or keep it until 16$ if you are more bullish in your own analysis. It is highly recommended to keep the position on check if it goes sour.

For the risk-taking trader:
The contracts should be kept until the underlying reaches around 14$. This should provide a satisfactory return if the underlying reaches the target price as the contracts will get in the money.

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