Admittedly, entertainment giant Warner Bros. Discovery (WBD) got to the streaming video party a bit late. But with a deep bench of intellectual property, it should have some real room to run. Not everybody feels that way, however, and some reports suggest things will be tough going forward for Warner. Investors were much less concerned, and sent shares up nearly 3% in the closing minutes of Friday’s trading.
Analyst Ian Bezek took a look at the field and generally did not like what looked back. Warner has a massive debtload, he pointed out, and also noted that revenues from movies and linear television are in open decline. While the Max streaming service has delivered solid numbers, Bezek wondered how this would actually work out long term. But two things were clear: cash was coming in, and debts were getting repaid.
One key point to remember, however, is the possibility of recession. While some believe we are in one now, and others believe we already had one, and still others suggest that there has not been one in years, the key point is that, if one shows up now, it could do quite a bit of damage to anything in the “discretionary income” segment, like Warner.
Building Up the Line
Warner is not taking the notion of a recession derailing its progress likely. DC Studio co-CEOs Peter Safran and James Gunn offered up a presentation for Warner staff illustrating what is incoming, and why the slate should deliver results. Specifically what was in said presentation was unclear, but with a new Superman trailer set to drop April 1, Superman was likely a major part of said presentation.
Moreover, Discovery Plus is also getting a retooling, and will apparently run under the same technology as the Max service does, which should mean better and more reliable access to video. Reports suggest that the current video player was “…very laggy,” which might have turned some off the service. But switching over to Max’s technology should, in turn, provide better performance, better content recommendations, and a better overall experience for the end user. It also may help the platform withstand a possible recession, as some viewers who might have quit end up staying.
Is WBD Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on WBD stock based on 10 Buys and six Holds assigned in the past three months, as indicated by the graphic below. After a 19.2% rally in its share price over the past year, the average WBD price target of $13.33 per share implies 30.49% upside potential.
Questions or Comments about the article? Write to editor@tipranks.com