Citi does not see much downside in TKO if UFC settlement is tossed

Citi analyst Jason Bazinet says TKO Group faces two class action lawsuits related to UFC fighter compensation while the UFC and the plaintiffs reached an agreement in March 2023 for $335M. However, press reports indicate that the judge has several concerns with the settlement, says Citi, which expects the judge to offer his opinion next week. The firm’s analysis suggests there may not be much incremental downside in TKO’s equity even if the judge tosses the settlement. The plaintiffs are open to reaching an agreement that doesn’t impinge upon UFC’s long-term margins, which is a positive, the analyst tells investors in a research note. The firm keeps a Buy rating on TKO with a $130 price target.