Warner Bros Discovery stock target raised to $11 by Bernstein

On Friday, Bernstein analysts increased the price target for Warner Brothers Discovery (NASDAQ:WBD) shares, raising it from $9.00 to $11.00. The firm has kept its Market Perform rating on the stock. The media giant, currently valued at nearly $27 billion, has seen its shares surge over 40% in the past six months according to InvestingPro data. The analysts at Bernstein highlighted a more optimistic outlook for the company as it moves towards 2025, despite having faced a challenging period which included the loss of NBA broadcasting rights and underperforming film releases.

Laurent Yoon of Bernstein provided insight into the rationale behind the revised price target. He noted that Warner Brothers Discovery is poised for a better setup by 2025, with clearer expectations for its Linear business following the loss of the NBA rights. The company, which generated $39.3 billion in revenue and $7.1 billion in EBITDA over the last twelve months, maintains a GOOD financial health score according to InvestingPro’s comprehensive analysis. Additionally, the Studios segment is anticipated to generate increased revenue and EBITDA, thanks to an enhanced content slate. Moreover, the company has uplifted its direct-to-consumer (DTC) EBITDA forecast by 30% for the year 2025.

The updated price target reflects the expected acceleration in DTC revenue and EBITDA growth, according to the company’s guidance and trajectory. Furthermore, the analysts foresee an uptick in Studios revenue and EBITDA, fueled by the company’s content lineup. Despite the positive adjustments to the financial forecasts, Bernstein maintains a Market Perform rating on Warner Brothers Discovery shares.

The upgrade in the DTC EBITDA guidance for 2025 suggests that Warner Brothers Discovery is adapting to the changing media landscape with a focus on direct-to-consumer services. This strategic shift is indicative of the company’s efforts to capitalize on the growing demand for streaming content and digital distribution channels.

Warner Brothers Discovery has not publicly responded to the revised price target. The company’s stock performance in the upcoming quarters will likely reflect its progress in executing its strategy and meeting the updated financial expectations set forth by analysts. Currently, analyst price targets range from $9 to $22, suggesting significant potential volatility ahead. For deeper insights into WBD’s valuation and growth prospects, investors can access the comprehensive Pro Research Report available on InvestingPro, which includes detailed analysis of the company’s financial health, valuation metrics, and growth potential.

In other recent news, Warner Bros Discovery reported its fourth-quarter 2024 earnings, missing analysts’ expectations for both earnings per share (EPS) and revenue. The company posted an EPS of -$0.20, falling short of the anticipated -$0.001, and revenue came in at $10.02 billion, slightly below the forecasted $10.24 billion. Despite these misses, the company experienced significant growth in its direct-to-consumer segment, adding 6.5 million subscribers and ending the year with 117 million subscribers. The direct-to-consumer business contributed nearly $700 million in EBITDA, showing a $3 billion improvement over two years.

Raymond (NSE:RYMD) James recently raised its price target for Warner Bros Discovery from $12.00 to $14.00, maintaining an Outperform rating. This adjustment came after the company’s fourth-quarter results and a positive outlook for 2025. The analyst noted the company’s strong asset portfolio, including intellectual properties like DC Comics and Harry Potter, as a key strength. Warner Bros Discovery aims to achieve $1.3 billion in direct-to-consumer EBITDA by 2025 and reach 150 million subscribers by 2026.

The company continues to focus on expanding its global reach, particularly with the international launch of its streaming service, Max. Despite the challenges faced during the quarter, Warner Bros Discovery is preparing for the global launch of its Harry Potter franchise and developing a CNN digital subscription business. The firm also highlighted the potential of underappreciated assets like WB Games, which are expected to offer longer-term upside.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.