Guggenheim Lifts PT on Discovery Communications (DISCA) to $97; Domestic Ratings, Int'l Ad Growth Key Drivers

Guggenheim boosts price target on Discovery Communications (Nasdaq: DISCA) from $96 to $97 and affirms its Buy rating on the stock.

Analyst Michael Morris noted three key drivers for Discovery:

1. domestic ratings acceleration from 4Q levels;

2. strong international ad and affiliate growth rates; and

3. incremental contribution from OWN (which saw 56% growth in primetime audience in 1Q).Discovery continues to make several large (31% of Eurosport for $336mm) and small (modest investment in digital studio New Form) investments with the intention of leveraging its global content distribution footprint. The company's fall lineup primarily sticks to its non-fiction roots, with The West as a scripted foray. We believe the company is actively seeking a short-term, exclusive SVOD agreement rather than making its content available on a non-exclusive basis, Morris noted.

   Bottom line: Some investors may be looking for near-term estimate cuts, but we don't anticipate big changes.

   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 $83.74 yesterday.

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