Warner Bros. Discovery Stock: Let the downgrades begin

The Warner Bros. stock. Discovery may not be the best home for your child's college fund. After the company announced on Thursday that it lost $3.4 billion in its very first quarter, Wells Fargo analysts compared WBD stock to Netflix. This comparison works in more ways than one, and none of them are good.

The bank's researchers quickly lowered their rating for WBD shares from 'buy' to 'hold' on Friday - the same rating they gave Netflix, which is reeling from two consecutive quarters of losses. subscribers. Wells Fargo also lowered its WBD stock price target from $42 to $19. Shares closed below $15 on Friday, down 17% from the previous day's close.

Competitors of Warner Bros. Discovery, Disney, Comcast, Netflix and Paramount "are struggling to grow their streaming/DTC (direct-to-consumer) businesses and turn a profit, and that without the added baggage of a major merger project," the authors wrote. researchers.

They continued in the style of Dear John — or in this case, Dear David: "We prefer simpler stories like [Disney] and [Paramount]. WBD's demotion to Equal Weight ["hold"] puts our thinking more in line with our [Netflix] thesis: another solid set of assets, but with a long way to go as it navigates a whole new path."

Media analysts at MoffettNathanson on Friday maintained their previous "hold" rating and $18 share price target for WBD, pointing to pressures from the company's $50 billion debt, a difficult economic environment, power outages and unanswered questions about its Strategic Direction. In other words, they didn't need to make any changes because they were already there.

Several other analysts also maintained their previous ratings for WBD; price targets ranged from $16 to $25. Cowen (target price: $24) and Goldman Sachs (also $24) retained their buy ratings; announced yesterday, while Cowen thinks the shares have bottomed out.

"Wonder Woman"

©Warner Bros/courtesy Everett Collection / Everett Collection

Hollywood and Wall Street waited months to see exactly how CEO David Zaslav would integrate WarnerMedia and Discovery into one company. Thursday marked the first earnings call for this marriage, and Wells Fargo's Steven Cahall, who asked a question during the event, concluded that the "growing pains" were evident.

There are a few...