Warner Brothers Discovery (WBD) PT Raised at KeyBanc; '2Q Setup Positive'

KeyBanc analyst Brandon Nispel raised the price target on Warner Brothers Discovery (NASDAQ: WBD) to $18.00 (from $13.00) while maintaining an Overweight rating.

The analyst commented: "2Q Setup Positive; We reiterate our OW rating on WBD and raise our PT to $18 (8.1x 2026 adj. EBITDA), which reflects our pro forma valuations for Warner Bros. (fka Streaming and Studios) and Discovery Global (fka Global Networks). We see the 2Q setup as positive: we expect WBD to beat on total revenue/adj. EBITDA with Studios and DTC upside. We expect to hear DTC EBITDA guidance raised to >$1.4B and expect Studios EBITDA to improve close to $2.5B in 2025. As we look forward, we think the recent tender offer should improve net leverage by ~$3B, and result in consolidated leverage of ~3.5x by YE25. Lastly, we think the S&S spin from Global Networks should unlock value for shareholders, where we value S&S at ~11x pro forma EBITDA and Global Networks at ~6x EBITDA. While our conviction level is lower given the stock performance, we think the downside is protected through improving fundamentals and the upside is potentially uncapped, as the market looks to value the world's largest Film/TV Studio and HBO Max, a top-5 streaming service."

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