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Wall St. analyst says WWE is his top pick, expects shares to climb 49%

LAS VEGAS, NV - JANUARY 08:  WWE Chairman and CEO Vince McMahon speaks at a news conference announcing the WWE Network at the 2014 International CES at the Encore Theater at Wynn Las Vegas on January 8, 2014 in Las Vegas, Nevada. The network will launch on February 24, 2014 as the first-ever 24/7 streaming network, offering both scheduled programs and video on demand. The USD 9.99 per month subscription will include access to all 12 live WWE pay-per-view events each year. CES, the world's largest annual consumer technology trade show, runs through January 10 and is expected to feature 3,200 exhibitors showing off their latest products and services to about 150,000 attendees.  (Photo by Ethan Miller/Getty Images)
WWE Chairman and CEO Vince McMahon speaks at a news conference announcing the WWE Network at the 2014 International CES at the Encore Theater at Wynn Las Vegas on January 8, 2014 in Las Vegas, Nevada. (Ethan Miller/Getty Images)

World Wrestling Entertainment's (WWE) stock has fallen on some hard times as of late. But company's best days could be just ahead according to Guggenheim analysts.

“Buy-rated WWE is our ‘Best Idea’ into the remainder of 2019,” Guggenheim analyst Curry Baker said in a note to clients. Baker has a $100 price target on the stock.

WWE had a banner 2018. The company generated a record $930 million in revenue, up 16% year-over-year. And it projected that by 2019's end, it would reach $1 billion in revenue for the first time in the company's history. Before reporting Q1 earnings at one point in April, WWE's stock was near all-time highs at almost $98 a share. Since that time the stock is down over 23%. So what happened?

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While 2019 started promisingly, not only did WWE miss Q1 expectations, but it also saw an unexpected dip in revenue compared to the prior-year quarter. WWE Chairman and CEO Vince McMahon during the Q1 earnings call with analysts blamed the company’s misfortunes on injuries during the period.

"I mean they lost a third of their roster." Baker tells Yahoo Finance.

Absent stars lead to lower show attendance, and lower show attendance leads to weaker merchandise sales at the shows, and from there the rest of the dominoes fall. It even resulted in WWE offering 2-for-1 ticket deals for both it's June and July Pay-Per-View events.

WWE wrestlers Alberto Del Rio (L) and Roman Reigns participate during the WWE Survivor Series, a professional wrestling event at Philips Arena in Atlanta, Georgia November 22, 2015. The Federal Bureau of Investigation said on Saturday (November 21) it did not view a reported threat by Islamic State militants to attack a professional wrestling event in Atlanta this weekend as credible.  REUTERS/Tami Chappell
WWE wrestlers Alberto Del Rio (L) and Roman Reigns participate during the WWE Survivor Series, a professional wrestling event at Philips Arena in Atlanta, Georgia November 22, 2015. REUTERS/Tami Chappell

Some in the industry have been skeptical and blamed WWE's lackluster TV product as the reason for the drop in attendance.

But now the company's roster is at near full strength, and live show attendance is starting to pick back up. Baker and Guggenheim remain bullish on WWE and see positive catalysts on the horizon for the company. The firm points to WWE's massive new U.S. TV deals with FOX (FOX) and Comcast-owned (CMCSA) NBC Universal as well as the expansion of WWE TV deals overseas in India as a reason for optimism.

“India is WWE’s number one market in terms of content consumption and audience size, with sports viewership trailing only Cricket,” Curry wrote.

WWE is trading at around $67, implying a 49% upside to Baker’s $100 target.

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Reggie Wade is a writer for Yahoo Finance. Follow him on Twitter at @ReggieWade.

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