Updated 1:16 p.m. PT: Warner Bros. Discovery stock was trading at $12.56 per share as of market close Tuesday, up more than 8% from Monday’s close, up more than 31% since the start of the year and at its highest price since Nov. 2.
It’s a fiery start to the new year on Wall Street for Warner Bros. Discovery, which has seen its shares jump 25% over the past five days and climb nearly 5% since the market opened Tuesday morning, following two top media analysts’ very positive 2023 outlooks for WBD.
Goldman Sachs analyst Brett Feldman went so far as to call the David Zaslav-run company, which this time last year was just Discovery, ahead of its April acquisition of WarnerMedia from AT&T, their “favorite media stock” in a research note published at 5:09 a.m. ET. He’s set his 12-month price target for WBD shares at $19.
As of 11:37 a.m. ET, Warner Bros. Discovery was trading at $12.18 per share, up 4.90% from its closing price of $11.61 on Monday. That trading value marks a two-month high for WBD.
“While WBD confronts many of the challenges facing traditional media companies (cord-cutting, macro pressure on advertising, intense streaming competition), the stock trades at 6.5x 2023E EV/EBITDA, which is at the low-end of comps (6.5-15x),” Feldman wrote in his analyst note. “However, we estimate that WBD is best positioned to drive EBITDA growth, ramp FCF and deliver its balance sheet in 2023 as it pursues $3.5bn of merger synergies and relaunches its flagship streaming service. As such, while we expect investors to continue to debate the long-term outlook for traditional media companies, we see the risk/reward skew for WBD as most attractive vs. its peer group with key execution catalysts (merger milestones, streaming relaunch) largely within management’s control.”
Feldman wasn’t the only Wall Street expert giving a glowing assessment of WBD’s future Tuesday: Bank of America’s Jessica Reif Ehrlich also published a report that reiterated her “buy” label and $21 price objective for the media stock while stating “we continue to remain bullish on the long term potential of WBD and view the current risk/reward as highly attractive.”
Ehrlich noted that specific upcoming catalysts for her evaluation include WBD’s “launch of a new combined DTC service this spring, a new FAST service in 2023, a more robust film slate in 2023” and “the incremental merger related synergies,” which are currently valued at $2 billion.
Though Warner Bros. Discovery is coming out of a rocky post-merger 2022, it’s already rung in a pretty good start to 2023, re-signing prolific producer Greg Berlanti to a new mega overall deal Monday, a big sign of WBD successfully working to retain key longstanding WB talent for the future. That news came on the heels of CFO Gunnar Wiedenfels promising that the tide was turning from “restructuring” to a “relaunching and building” year at the company during an investment conference last week, where he also teased the improvements that will be seen in the combined HBO Max-Discovery+ streamer.
