Warner Bros. Discovery, Inc. (WBD), headquartered in New York and valued at $21.2 billion by market cap, is a leading player in the media and entertainment industry. Known for its extensive range of content across television, film, and streaming platforms, the company engages a worldwide audience through well-known brands such as Discovery Channel, HBO Max, and Warner Bros. Pictures.
WBD stock has considerably underperformed the broader market over the past 52 weeks. WBD has declined 32.9% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 20.5%. In 2024 alone, shares of WBD are down 24.1%, compared to SPX's 15.8% gains on a YTD basis.
Zooming in further, WBD also trails behind the Dynamic Leisure And Entertainment Invesco ETF's (PEJ) 6.1% gains over the past 52 weeks.
On July 22, the NBA announced that it had rejected Warner Bros. Discovery's $1.8 billion annual offer and has instead signed a deal with Amazon.com, Inc.’s (AMZN) Prime Video, ending TNT’s nearly 40-year broadcast of NBA games. The market reacted negatively, sending WBD stock more than 7% in the subsequent trading sessions.
Despite the recent bearish trend in the broader market, Warner Bros. Discovery shares rose over 15% in the week leading up to July 19. This increase seems to be driven by investor optimism about the company's future. Positive sentiment also followed Bank of America analyst Jessica Reif Ehrlich’s suggestion that strategic moves like asset sales or restructuring could enhance WBD’s shareholder value.
Despite struggling to hit the consensus estimates for the last four quarters, Warner Bros. Discovery is on a path to turn things around, inching closer to profitability. For the current fiscal year, ending in December, analysts anticipate WBD's loss per share to narrow 65.6% year over year to $0.44 on a diluted basis.
Among the 26 analysts covering WBD stock, the consensus rating is "Moderate Buy," based on 11 "Strong Buy" ratings, one "Moderate Buy," 12 "Holds," and two "Strong Sell" ratings.
The consensus rating is slightly less bullish than a month before, with 12 analysts suggesting a “Strong Buy.”
On July 29, Morgan Stanley (MS) analyst Benjamin Swinburne lowered Warner Bros. Discovery's price target to $9 while maintaining a “Hold” rating on the stock. His cautious stance is due to high financial leverage and challenges in the Basic Networks segment, despite recognizing the company's potential for strong free cash flow and the positive impact of not renewing NBA rights.
Furthermore, the average price target of $11.28 indicates a potential upswing of 30.4% from WBD's current price.
On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
