Global Streaming Expansion And Iconic Content Will Unlock Future Potential

Warner Bros. Discovery’s consensus price target rose slightly to $14.90 as analysts cite improved Studios and direct-to-consumer performance, potential bid interest, and expected EBITDA beats, while headwinds in linear TV and uncertainty around long-term earnings temper optimism.

Analyst Commentary

• Bullish analysts highlight potential bid interest from Paramount Skydance, suggesting a higher sum-of-the-parts valuation and reinforcing upside above base price targets.
• Several analysts cite anticipated beat on total revenue and adjusted EBITDA, with notably strong performance in the Studios and direct-to-consumer segments, alongside raised guidance for future EBITDA.
• Positive Q2 box office results, ongoing TV segment momentum, and easier year-over-year comparisons are expected to drive significant Studios EBITDA growth, partially offset by continued industry headwinds in linear networks.
• Bearish analysts point to lingering challenges for the general entertainment linear TV business, with weakness across linear content segments despite strength in sports advertising.
• Prospects for shareholder value creation are seen in post-split M&A activity, planned divestitures (such as the S&S spin from Global Networks), and improved leverage resulting from recent tender offers; however, debate persists around the impact of corporate actions and normalized earnings potential beyond 2027.

What's in the News

• Warner Bros. Discovery (WBD) CEO David Zaslav is seeking to generate a bidding war for the company, holding talks with bankers and exploring potential interest from Amazon, Apple, and Netflix, aiming to push the stock price up to $40/share (NY Post).
• Paramount Skydance (PSKY) is preparing a majority cash bid for WBD, possibly launching as soon as next week; any merger would face significant regulatory scrutiny, operational challenges, and potential job cuts, with the entire company targeted in the offer (WSJ, CNBC, Bloomberg).
• Warner Bros. Discovery may sell a 20% stake in its studio and streaming business ahead of its planned 2026 split into two companies, aiming to maximize valuation; discussions with interested parties are ongoing (Bloomberg).
• WBD is enacting layoffs impacting roughly 10% of its Motion Picture Group workforce as part of broader restructuring in preparation for splitting into Warner Bros. (film, TV studios, streaming) and Discovery Global (networks, Discovery+, other assets) (Variety).
• Raymond James lowered its price target on WBD to $13 from $14, citing strong Q2 results but weaker networks content revenues; analyst expects greater M&A activity following the company's split (Raymond James).

Valuation Changes

Summary of Valuation Changes for Warner Bros. Discovery

• The Consensus Analyst Price Target remained effectively unchanged, moving only marginally from $14.69 to $14.90.
• The Discount Rate for Warner Bros. Discovery has fallen from 12.32% to 11.45%.
• The Future P/E for Warner Bros. Discovery remained effectively unchanged, moving only marginally from 14.34x to 14.13x.