The brand new Warner Bros. Discovery is getting a warm reception from some analysts on Wall Street. Atlantic Equities and Evercore ISI upgraded the entertainment company to overweight and outperform, respectively, after the merger between WarnerMedia and Discovery closed on Friday. Atlantic analyst Hamilton Faber said in a note to clients that Warner Bros. Discovery should challenge top brands in the streaming space. "With a portfolio of some of the world's strongest content brands, we believe WBD is positioned to be as equally successful as Disney in DTC, yet the new company is trading at a very material discount. There will likely be some near-term selling pressure on the shares but this will probably be short-lived," Faber wrote. That short-term selling pressure could come from AT & T shareholders, who received shares in Warner Bros. Discovery as part of the spinoff of WarnerMedia from the telecom company. Evercore ISI analyst Vijay Jayant, meanwhile, highlighted the potential for strong cash flow from the company and praised the combined content offering for a potential single streaming service. "We believe the combination of HBO Max and discovery+ into a single service will be highly synergistic. HBO Max will bring the expensive, flashy originals needed to acquire customers, while discovery+'s unscripted content provides the large library of content needed to retain those customers," Jayant wrote. Both firms now have a price target of $40 per share on Warner Bros. Discovery, which is more than 60% above where the stock closed on Friday. — CNBC's Michael Bloom contributed to this report.
Source: Warner Bros.
The brand new Warner Bros. Discovery is getting a warm reception from some analysts on Wall Street.