TECH - Warner Bros. Discovery Eyes Turnaround with Upcoming Disney+ Bundle and NBA Deal Analysts Say | Benzinga
Keybanc analyst Brandon Nispel upgraded Warner Bros. Discovery Inc (NASDAQ:WBD) from Sector Weight to Overweight and a $11 price target.
WBD reported fiscal first-quarter revenue of $9.96 billion, a 6.9% year-on-year decrease, according to Nispel. This was against a consensus of $10.25 billion. The total adjusted EBITDA of $2.10 billion, a 19.5% year-on-year decrease, fell short of the consensus of $2.18 billion.
Nispel added that a $200 million content impairment for the Studios segment negatively impacted the results.
However, free cash flow (FCF) of $390 million exceeded the consensus of $8.0 million, thanks to a strike that improved working capital and reduced capital spending.
Nispel noted that the numbers have likely bottomed out. Regardless, a resolution to the NBA issue is expected to be positive. Direct-to-consumer (DTC) profitability, subscriber growth, and average revenue per user (ARPUs) are all expected to continue improving.
According to Nispel, the stock is washed out and likely ready for a short-term rally due to these factors. As the numbers stop decreasing, an NBA resolution becomes apparent, and DTC continues to drive toward more meaningful profitability with subscriber or ARPU growth, WBD's multiple should ...