Warner Bros. Discovery, Inc. Just Reported A Surprise Profit And Analysts Updated Their Estimates

There's been a notable change in appetite for Warner Bros. Discovery, Inc. (NASDAQ:WBD) shares in the week since its second-quarter report, with the stock down 15% to US$10.91. It looks like a credible result overall - although revenues of US$9.8b were what the analysts expected, Warner Bros. Discovery surprised by delivering a statutory profit of US$0.63 per share, instead of the previously forecast loss. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

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Taking into account the latest results, the 23 analysts covering Warner Bros. Discovery provided consensus estimates of US$37.6b revenue in 2025, which would reflect a noticeable 2.3% decline over the past 12 months. Statutory per-share earnings are expected to be US$0.31, roughly flat on the last 12 months. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$38.0b and losses of US$0.39 per share in 2025. While there's been no material change to the revenue estimates, there's been a pretty clear upgrade to earnings estimates, with the analysts expecting a per-share profit compared to previous expectations of a loss. So it seems like the latest results have led to a significant increase in sentiment for Warner Bros. Discovery.

See our latest analysis for Warner Bros. Discovery

The consensus price target was unchanged at US$14.73, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Warner Bros. Discovery at US$24.00 per share, while the most bearish prices it at US$10.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Warner Bros. Discovery's past performance and to peers in the same industry. We would highlight that revenue is expected to reverse, with a forecast 4.6% annualised decline to the end of 2025. That is a notable change from historical growth of 29% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 10% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Warner Bros. Discovery is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that there's been a clear step-change in belief around the business' prospects, with the analysts now expecting Warner Bros. Discovery to become profitable next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Warner Bros. Discovery's revenue is expected to perform worse than the wider industry. The consensus price target held steady at US$14.73, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Warner Bros. Discovery. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Warner Bros. Discovery analysts - going out to 2027, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 3 warning signs for Warner Bros. Discovery you should be aware of, and 2 of them make us uncomfortable.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.