Goldman Sachs Downgrades Discovery Communications (DISCA) to Sell; Multiples to Contract on Weaker Ratings

July 13, 2012 7:13 AM EDT Send to a Friend
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Price: $35.43 +0.06%

Rating Summary:
    10 Buy, 19 Hold, 1 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 14 | Down: 28 | New: 51
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Goldman Sachs downgraded Discovery Communications (NASDAQ: DISCA) from Neutral to Sell with a price target of $46.00 (from $51.00).

Analyst, Drew Borst, said, "In our view, estimates and the multiple will contract on weak ratings, peer-high euro exposure, and competition from the Olympics. Our revised 2012E EPS is 4% below consensus (6% below in 2H12). DISCA shares are up over 25% year to date (vs. large cap peers +15%), with 85% of the appreciation due to multiple expansion. While recent digital deals drove higher than expected earnings, we don’t think DISCA should trade at a historic average P/E given the headwinds that we see leading to more peer-like growth."

Borst lowers FY12 EPS estimate from $2.75 to $2.65, FY13 from $3.40 to $3.25 and FY14 from $4.00 to $3.85.

For an analyst ratings summary and ratings history on Discovery Communications click here. For more ratings news on Discovery Communications click here.

Shares of Discovery Communications closed at $50.24 yesterday.


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