Warner Bros. Discovery shares (WBD) are coming back to Earth after a surge that left analysts warning the valuation has run ahead of reality. The stock, up 63% since Sept. 11 on takeover chatter, slipped again on Friday after another downgrade landed on Wall Street.
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Takeover Hype Meets Analyst Doubt
KeyBanc analyst Brandon Nispel cut Warner Bros. to Sector Weight from Overweight, pointing to the risks around a rumored Paramount (PARA) Skydance bid. Shares were down 1.7% to $19.45 in premarket trading.
“With the reports on a potential takeover, we feel the stock’s valuation has gotten ahead of the fundamentals,” Nispel wrote. “We have no way of knowing if a deal will ultimately materialize.”
He also warned that Warner Bros. may be fishing for a bidding war that could collapse altogether. CEO David Zaslav has been seeking an offer around $40 a share, according to reports, but that figure looks increasingly ambitious as skepticism grows.
Momentum May Not Last
The downgrade follows a similar move earlier this month by TD Cowen’s Doug Creutz, who said Warner Bros. was beginning to look overvalued after its September run. Both cautions suggest that without a firm deal, investors may soon find themselves holding a stock priced for perfection.
Is Warner Bros. Stock a Good Buy?
Warner Bros. Discovery currently carries a Moderate Buy consensus based on 13 analyst ratings in the past 3 months. That includes four Buys, nine Holds, and zero Sell ratings. The average 12-month WBD price target sits at $14.55, implying a 26.44% downside from the last price.
