Citi raises Warner Brothers Discovery target to $15, keeps Buy rating

On Wednesday, Citi analysts, led by Jason Bazinet, increased the price target for Warner Brothers Discovery (NASDAQ:WBD) shares to $15.00, up from the previous $15.00, while maintaining a Buy rating on the stock. The company’s stock, currently trading at $11.32, has shown strong momentum with a 7.81% gain in the past week. Bazinet’s commentary highlighted the methodological basis for the target adjustment, stating, "Maintaining Our View – Along with our updated estimates, we are rolling forward our valuation from 2025 to 2026. Following our update, our target price goes from $13 to $15, akin to ~7x 2026 Adj. EBITDA."

The adjustment in the price target was described as largely mechanical, reflecting a shift in the valuation year from 2025 to 2026. This update comes as Warner Brothers Discovery, with its current market capitalization of $27.79 billion, continues to navigate the evolving media landscape. According to InvestingPro analysis, the company appears undervalued based on its Fair Value calculations, with analysts’ price targets ranging from $9 to $22.

Bazinet also speculated on the potential impact of industry consolidation on the company’s narrative, suggesting that it might become more positive. He mentioned, "While the increase in our target price is largely mechanical (as we shift to 2026), we can’t help but wonder if the narrative on WBD tilts even more positive as consolidation moves to the fore in 2H25 and 2026."

The analyst’s remarks indicate a forward-looking perspective on Warner Brothers Discovery’s position in the market, particularly in relation to expected industry trends such as consolidation in the latter half of 2025 and into 2026.

Warner Brothers Discovery’s stock price target increase reflects Citi’s analysis of the company’s adjusted EBITDA and its potential growth trajectory over the next few years. The maintenance of the Buy rating suggests that Citi continues to see the company as a favorable investment opportunity.

In other recent news, Warner Brothers Discovery reported its fourth-quarter 2024 earnings, revealing a miss on both earnings per share (EPS) and revenue forecasts. The company posted an EPS of -$0.20, which fell short of the anticipated -$0.001, and revenue came in at $10.02 billion, slightly below the forecasted $10.24 billion. Despite these setbacks, the direct-to-consumer (DTC) segment showed significant growth, adding 6.5 million subscribers and contributing nearly $700 million in EBITDA. KeyBanc Capital Markets maintained its Overweight rating on the company with a $14.00 price target, noting a 10.2% increase in adjusted EBITDA despite a 2.5% decline in revenue. Meanwhile, Bernstein raised its price target for Warner Brothers Discovery shares from $9.00 to $11.00, citing a more optimistic outlook towards 2025 and an uplifted DTC EBITDA forecast by 30% for that year. Raymond (NSE:RYMD) James also adjusted its outlook, increasing the price target to $14.00, highlighting the company’s asset portfolio and the promising growth of its DTC segment. These recent developments reflect analysts’ mixed but generally positive outlooks on Warner Brothers Discovery’s strategic positioning and future growth potential.

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