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

It's been a pretty great week for Warner Bros. Discovery, Inc. (NASDAQ:WBD) shareholders, with its shares surging 12% to US$9.18 in the week since its latest quarterly results. Although revenues of US$9.6b were in line with analyst expectations, Warner Bros. Discovery surprised on the earnings front, with an unexpected (statutory) profit of US$0.05 per share a nice improvement on the losses that the analystsforecast. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for Warner Bros. Discovery

Taking into account the latest results, Warner Bros. Discovery's 25 analysts currently expect revenues in 2025 to be US$40.2b, approximately in line with the last 12 months. Losses are predicted to fall substantially, shrinking 97% to US$0.13. Before this earnings announcement, the analysts had been modelling revenues of US$40.7b and losses of US$0.057 per share in 2025. While next year's revenue estimates held steady, there was also a very substantial increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.

Despite expectations of heavier losses next year,the analysts have lifted their price target 6.0% to US$11.19, perhaps implying these losses are not expected to be recurring over the long term. 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. The most optimistic Warner Bros. Discovery analyst has a price target of US$22.00 per share, while the most pessimistic values it at US$6.00. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Warner Bros. Discovery's revenue growth is expected to slow, with the forecast 1.3% annualised growth rate until the end of 2025 being well below the historical 35% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 8.9% per year. Factoring in the forecast slowdown in growth, it seems obvious that Warner Bros. Discovery is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Warner Bros. Discovery. 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. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Warner Bros. Discovery going out to 2026, and you can see them free on our platform here..

Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Warner Bros. Discovery that you should be aware of.

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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.