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Discovery Communications shares are roaring higher on Friday, after an analyst upgraded the stock and issued a price target 75% above Thursday’s closing price in a 30-page report.
BofA’s Jessica Reif Ehrlich sees Discovery’s coming merger with
AT&T
‘s WarnerMedia subsidiary as creating “a global media powerhouse” to rival the likes of
Netflix
and
Walt Disney
.
Discovery stock (ticker: DISCA) jumped 17% in Friday morning trading. That pop is worth some $1 a share to AT&T (T), which was also upgraded to the equivalent of Hold—from Sell—by Wells Fargo on Friday. AT&T stock rose 3% in morning trading Friday. Discovery’s voting shares (DISCK) also added 17%.
Reif Ehrlich upgraded Discovery shares to Buy, from Neutral, and lifted her price target to $45, from $34 previously. That compares with the stock’s $25.72 closing price on Thursday, and levels around $30 after Friday morning’s bump.
Last May, AT&T announced plans to spin off and merge WarnerMedia with Discovery in a transaction known as a Reverse Morris Trust. AT&T shareholders will own most of the combined media company—to be called Warner Bros. Discovery—while current Discovery CEO David Zaslav will lead the entity. The company’s U.S. cable networks will include Discovery Channel, Food Network, CNN, TNT, Cartoon Network, and more. Other assets include the Warner Bros. film studio and Discovery’s European networks. But its future will be focused on streaming: HBO Max and Discovery+ are the current offerings there.
Reif Ehrlich expects Warner Bros. Discovery will have sufficient content and financial scale to compete in the competitive global streaming market.
“It remains to be seen how many services consumers will…
..
