Why Warner Bros. Discovery Stock Jumped Today

Sizable gains could lie ahead for investors.

Sizable gains could lie ahead for investors.

What happened

Shares of Warner Bros. Discovery ( WBD 5.35% ) rose on Wednesday following bullish analyst remarks. By the close of trading, the media company’s stock price was up 5.3% after rising as much as 11.4% earlier in the day.

So what

Telecom titan AT&T ( T 0.71% ) recently spun off its WarnerMedia assets and merged them with television conglomerate Discovery. Investors had their first chance to buy the combined company’s shares on Monday. 

On Wednesday, Bank of America analyst Jessica Reif Ehrlich placed a buy on Warner Bros. Discovery’s stock. She sees its share price soaring 73% to $45 in the coming year.

People looking at a stock chart on a computer.

Image source: Getty Images.

With its valuable collection of cable and streaming properties, Reif Ehrlich thinks the new company will quickly become a powerhouse in the global media industry. Its assets include popular TV networks HGTV, CNN, and Food Network, as well as fast-growing streaming services HBO Max and Discovery+.

Moreover, Reif Ehrlich expects Warner Bros. Discovery to easily achieve management’s goal of $3 billion in cost savings following the merger. In turn, she believes the company can grow its earnings before interest, taxes, depreciation, and amortization (EBITDA) by more than 14% annually through 2025.


Now what

Despite its promising long-term prospects, investors should expect some short-term selling pressure on Warner Bros. Discovery’s stock. Reif Ehrlich cautioned that many former AT&T shareholders, who tend to be income-focused, may decide to sell the shares they received as part of the merger. Unlike AT&T, Warner Bros. Discovery does not pay a dividend.

Read this article on Motley Fool

Trading Signals

Get Free Daily Trading insight

Follow US:

StocksJar Is A Comprehensive Investing Tool And Social Trading Network For Private Investors And Day Traders To Help Them To Gain An Advantage Before Trading.

this website uses cookies

We use cookies to ensure you get the best experience on our website. To learn more about cookies, including how to control cookies please read our cookies policy.