Discovery (DISCA) Deal Addresses 5 Key AT&T (T) Weaknesses - BofA Securities

BofA Securities analyst David Barden reiterated a Buy rating and $36.00 price target on AT&T (NYSE: T) after the company announced the deal combining WarnerMedia and Discovery, Inc (NASDAQ: DISCA). AT&T will receive $43bn in a combination of cash & debt offload valuing the combined entity at $148bn EV. With an estimated $13bn of EBITDA in 2022, the implied combined valuation is 11.4x compared to an average large cap media valuation of 11.6x and is expected to close in mid-2022.

The analyst stated "In our view the transaction addresses 5 key weaknesses in the AT&T story including 1) simplifying a hugely complex equity story, 2) surfacing value in the media business that went unrecognized within AT&T (including DTC streaming), 3) reducing leverage, 4) shifting the burden of content investment to a dedicated external entity, and 5) allowing AT&T to make additional investments to accelerate growth."

For an analyst ratings summary and ratings history on AT&T click here. For more ratings news on AT&T click here.

Shares of AT&T closed at $31.37 yesterday.

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