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Investing.com - CFRA has raised its price target on Warner Brothers Discovery (NASDAQ:WBD) stock to $14.00 from $13.00 while maintaining a Hold rating on the entertainment company. This aligns with InvestingPro’s analysis, which suggests WBD is currently undervalued, despite the stock’s impressive 69% gain over the past year.
The research firm cited Warner Brothers Discovery’s planned corporate restructuring into two separate companies in 2026 as a positive step toward delivering shareholder value. CFRA is using a forward TEV/EBITDA multiple of 7.3x for its valuation, which aligns with direct peers in the legacy linear network space and the company’s current EV/EBITDA of 7.48x. InvestingPro data reveals the company maintains a healthy free cash flow yield of 15%.
CFRA revised its earnings estimates upward, now projecting earnings per share of $0.35 for 2025 and $0.10 for 2026, compared to previous forecasts of losses for both years. Revenue projections stand at $37.6 billion in 2025 and $38.5 billion in 2026.
In the second quarter of 2025, Warner Brothers Discovery reported GAAP earnings per share of $0.63, which included a one-time $3.0 billion gain from debt retirement. Normalized EPS for the quarter was $0.31, while adjusted EBITDA increased 9% year-over-year to $2.0 billion.
Cash provided by operating activities declined 20% year-over-year to $983 million in the second quarter, but CFRA believes the planned corporate restructuring will be the key driver for WBD shares going forward.
In other recent news, Warner Bros. Discovery reported its Q2 2025 earnings, showcasing a notable performance in revenue but falling short in earnings per share (EPS). The company achieved a revenue of $9.81 billion, exceeding the expected $9.73 billion. Despite this revenue success, the EPS was reported at $0.63, significantly missing the forecast of $0.25, resulting in a surprise of -352%. These recent developments reflect the mixed financial outcomes for the company this quarter. The revenue beat highlights strong sales performance, while the EPS miss indicates challenges in profitability. Analyst firms might interpret these results differently, potentially affecting their future ratings for the company. Investors are likely to consider these factors in their decision-making processes.
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