Discovery, Inc's (DISCA) Advertising Pressure Triggers A PT Cut To $31 At Imperial

Imperial Capital analyst, David Miller, reiterated his Outperform rating on shares of Discovery Communications (NASDAQ: DISCA) and cut his price target to $31 from $37 after listening to the CEO present at the USB Media Conference. During his presentation, he altered the company’s initial 4Q advertising guidance from “+3-5% yoy growth,” to stating that the company will now likely come in towards the low end of that range, possibly even slightly below that range depending on advertising activity within the Hulu and Sling skinny-bundle platforms.

The analyst stated "The reason for the altered guidance was primarily due to lower-than-expected live ratings and live+C3 ratings at the core Discovery Channel, although there was no mention of any ratings erosion within any of the international feeds for core Discovery". "DISCA derives 11.2% of total revenue, and the same percentage of EBITDA, from domestic advertising, and so mathematically, the re-jiggered advertising guidance simply was not enough to alter the overall 2018 company-wide EBITDA guidance of +7.0% on a pro forma basis over 2017. Nevertheless, DISCA shares finished down 8.2% in the session, which in our view, is indicative of a late-stage bull market, as there seems to be very little tolerance for bad news, or even mildly bad news".

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 $28.20 yesterday.

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