Wells Fargo Downgrades Warner Bros. Discovery Shares Amid Lower Earnings Forecast

Analyst cites less favorable M&A environment and challenges balancing direct-to-consumer services with licensing agreements.

Wells Fargo analyst Steven Cahall downgraded Warner Bros. Discovery (WBD) shares from 'overweight' to 'equal weight' and cut the stock price target from $16 to $12.
Cahall revised his financial forecasts for WBD, predicting lower earnings before interest, taxes, depreciation, and amortization (EBITDA) for 2024 and 2025.
The analyst also noted a 'less favorable' environment for mergers and acquisitions (M&A), reducing the likelihood of Comcast acquiring WBD.
Cahall highlighted the dilemma WBD faces between maximizing direct-to-consumer services and reaping the financial rewards of licensing agreements.
WBD shares fell 2.4% during Monday's trading session and are down 11% year to date and 27.9% in the past year.