Media and entertainment companies Warner Bros. Discovery (NASDAQ:WBD) and Paramount Global (PARA) fell in trading on Thursday after Redburn Atlantic analyst Hamilton Faber downgraded the stocks, citing a “negative tipping point” in linear advertising.
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The analyst downgraded Paramount to Sell, while WBD was downgraded to a Hold. He also has a price target of $11 on both PARA and WBD. When it comes to Paramount, Faber anticipates significant downside due to low margins, as any changes in advertising will crucially impact its EBITDA.
The analyst estimates a 10% and 21% downside to EBITDA and earnings per share estimates, respectively, over the next three years for Paramount. Faber also expects that WBD’s EBITDA will be impacted by 8%.
Both WBD and PARA stocks have not fared well over the past year and have declined by more than 15% and 30%, respectively.
Is WBD a Good Buy Now?
Overall, analysts remain cautiously optimistic about WBD stock with a Moderate Buy consensus rating based on eight Buys and five Holds. In addition, the average WBD price target of $16.40 implies an upside potential of 55.3% at current levels.
