It’s been a brutal start to 2020 for World Wrestling Entertainment, Inc. WWE investors. But even after the huge recent sell-off, yet another analyst threw in the towel on WWE on Monday.

The Analyst

Wells Fargo analyst Steven Cahall downgraded WWE from Overweight to Underweight and lowered his price target from $80 to $36.

The Thesis

Following the sell-off, Cahall said near-term catalysts, including international TV deals and a strategic deal for the WWE Network, are likely skewed to the upside for WWE. However, he sees no positive catalysts for WWE beyond these near-term developments.

Cahall said WWE’s valuation is getting penalized for the fact the company is making too many missteps.

He said there are four things WWE must do to get back on Wall Street’s good side:

1. It must close its Middle East, North Africa, Afghanistan, and Pakistan and its India TV deals at decent rates.
2. It must appoint a new CFO and begin regaining financial credibility.
3. It must provide reliable long-term guidance.
4. It must provide details on its elevated investment spending initiative.

In the meantime, Cahall said WWE stock will likely no longer trade at a valuation premium to traditional media stocks. Cahall also said WWE investors should keep expectations low related to the company’s reported pursuit of a “transformative” WWE Network deal.

“Monetizing WWE Network content could be incremental, but we’re not convinced this will be an earnings game-changer and we already value WWE Network at $400mm in our SOTP (so a ‘transformative’ transaction needs to be even more valuable to make us increase our target),” Cahall wrote in a note.

Benzinga’s Take

There may be a lot riding on the executives WWE hires to replace the two long-standing co-presidents that were let go unexpectedly last month. If WWE goes out and lands one or more high-profile executives that have proven track records, investors may be tempted to jump back into the stock.