Valued at a market cap of $25.7 billion, Warner Bros. Discovery, Inc. (WBD) is a media and entertainment company which creates and distributes a portfolio of content and brands across television, film and streaming. The New York-based company’s brands and products include Discovery Channel, CNN, DC, Eurosport, HBO, HBO Max, HGTV to name a few.
Companies valued at over $10 billion are typically classified as “large-cap stocks,” and WBD fits the label perfectly. The media conglomerate creates and distributes the world's most differentiated and complete portfolio of branded content which is available in more than 220 countries and territories and 50 languages.
The company has declined 17.4% from its 52-week high of $12.70, achieved on Dec. 12. Shares of this media company have rallied 24.9% over the past three months, significantly outperforming the broader Dow Jones Industrials Average’s ($DOWI) marginal gain during the same time frame.
However, in the longer term, WBD has declined 15.1% over the past 52 weeks, significantly underperforming DOWI’s 12.7% returns. Shares of WBD are down 7.8% on a YTD basis, massively lagging behind DOWI’s 12.3% gains over the same time frame.
To confirm its recent bullish trend, WBD has been trading above its 200-day moving average since early November and has remained above its 50-day moving average since late October.
Robust growth in WBD’s Direct-to-Consumer business and growing subscriber base from Max, mainly fueled by the company’s rapid international expansion, strategic partnerships including the one with Disney – Hulu (DIS), and its emphasis on providing original content contributed to WBD’s strong recent performance.
Furthermore, investor euphoria surrounding WBD's announcement of plans to split the business into two distinct units—Global Linear Networks and Streaming & Studios—caused shares of the company to soar 15.4% on Dec. 12.This change aims to simplify the organization's structure and provide more clarity in each unit.
On Nov. 7, shares of WBD gained 11.8% after its Q3 earnings release as its bottom line of $0.05 per share, significantly surpassed the consensus estimates of a loss of $0.07 per share. However, the company’s revenue of $9.6 billion, lagged behind the forecasted figure by 3.4%.
WBD has outperformed its rival, Lions Gate Entertainment Corp. (LGF-A) which declined 28.2% over the past 52 weeks and 28.7% on a YTD basis.
Given WBD’s recent outperformance, analysts remain moderately optimistic about its prospects. The stock has a consensus rating of “Moderate Buy” from the 26 analysts covering it, and the mean price target of $11.95 suggests a modest 13.9% premium to its current levels.
