Just a day after two upbeat analyst reports, with one expert touting it as his “favorite media stock,” Warner Bros. Discovery received another Wall Street favorite on Wednesday when Guggenheim’s Michael Morris upgraded his stock from “neutral” to “buy”. “
In his report, titled “Chapter 2: Management takes control of the story,” he highlighted a 12-month stock price target of $16.50, noting that this “represents for 31% upside potential.” After a difficult 2022 for stocks, Warner Bros. management. Discovery, led by CEO David Zaslav, is expected to focus on showing it is on track to save costs from the Discovery-WarnerMedia merger that created the company last year, the company said. announced a streaming service mix and other possible catalysts for its stake.
Morris explains: “We see a compelling story for the first half of 2023, with the impact of the recently announced inbound link extension, strong cost controls, and impending Max product launch being announced. restructuring as the main catalyst. In particular, cost discipline for direct-to-consumer transactions will reinforce confidence in the company’s ability to meet the 2023 consensus earnings estimate before interest, taxes, depreciation and amortization. depreciation (EBITDA) as well as leverage reduction targets.” The Wall Street expert concludes: “With the stock trading at an estimated 5x EBITDA in 2024 and an estimated 6x free cash flow in 2024, we see an attractive risk reward in all year.”
Morris also updated its streaming EBITDA forecasts for the fourth quarter of 2022, 2023, and 2024 by Warner Bros. Discovery. He now predicts a 2023 loss of less than $1.24 billion, better than his previous loss estimate of $1.67 billion. Morris then saw WBD’s streaming business turn a profit at $76 million by 2024, for which he had previously predicted a loss of $630 million.
As of 10:30 a.m. ET, WBD stock was down slightly at 12.43 shares.