By Sam Boughedda
Warner Bros. Discovery (NASDAQ:WBD) continued its share price climb on Wednesday after being upgraded to Buy from Neutral at Guggenheim.
Analysts there also assigned the stock a $16.50 per share price target.
The upgrade and share price gain on Wednesday follows a more than 8% rise on Tuesday by WBD after it was added to BofA's U.S. 1 List.
Guggenheim analysts told investors in their research note that the firm sees an "attractive narrative" for WBD in the first half of 2023, with the impact of recently announced domestic affiliate renewals, strong cost controls, and the upcoming launch of a restructured Max product as key catalysts.
"Cost discipline at direct-to-consumer in particular should bolster confidence in the company's ability to meet consensus 2023 EBITDA estimates and de-leveraging goals. A challenging ad environment and continued cord-cutting are ongoing secular pressures and sustained multiple expansion beyond our target will require further confidence that streaming gains can offset linear pain," they wrote.
They added that with WBD shares trading at 5x 2024E EBITDA and 6x 2024E FCF, they see the risk-reward as attractive as the year unfolds.