In 2021, AT&T Inc. and Discovery Inc. agreed to merge AT&T’s WarnerMedia assets with Discovery Inc.’s platform to create a standalone global entertainment company, now known as Warner Bros. Discovery Inc. Analysts are now comparing the new media firm with The Walt Disney Co.
Evercore ISI analyst Vijay Jayant upgraded WBD to Outperform from In-Line with a price target of $40, down from $45 (61.4 percent upside).
The merger of Discovery with Warner Media created the second-largest media company WBD, after Disney, and the third-largest streaming player with “the assets to successfully compete” in the global direct-to-consumer video streaming opportunity. The Reverse Morris Trust spin-merge transaction structure is likely to create a massive stock supply.
Atlantic Equities analyst Hamilton Faber upgraded WBD to Overweight from Neutral with a $40 price target.
Faber saw the new company have an equivalent DTC scale to Disney in terms of subscribers and content spending, along with “a portfolio of some of the world’s strongest content brands.” He expects some near-term short-lived selling pressure on Warner Bros. Discovery shares.
Deutsche Bank analyst Bryan Kraft raised the price target on WBD to $48 from $40 (93.7 percent upside) and kept a Buy, which he calls his new top pick in media following its merger deal.
The new WBD is one of the best-positioned companies in the global streaming video entertainment industry, given its content and intellectual property portfolio and 92 million streaming subscribers. Kraft forecasts the company to reach 194 million global DTC and streaming subscribers by 2026.
