While there are plenty of people waiting for the seemingly inevitable reversal of entertainment giant Warner Bros. Discovery (WBD) stock when the potential mergers fail to materialize, it is increasingly clear that that reversal is not arriving just yet. In fact, Morgan Stanley analysts have actually adjusted their price target up thanks to a few different factors. This was enough for investors, who sent Warner shares up fractionally in the closing minutes of Thursday’s trading.
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Morgan Stanley, via analyst Benjamin Swinburne—who has a five-star rating on TipRanks—hiked his price target from $13 to $15 per share, while maintaining an Equal Weight rating on the stock. The merger was not really what fired up Swinburne’s interest, but rather a better performance than expected in year-to-date numbers.
But the merger certainly played a role in things. Swinburne pointed out that the merger is fueling a “bull case” for Warner stock that could see shares ultimately go as high as $22 each. And, Swinburne acknowledged, the “bull case” may not even need a merger to succeed. The bull case could ultimately reach that level “fundamentally,” reports noted.
Cramer Weighs In
That was not all, however. As it turns out, well-known CNBC analyst Jim Cramer stepped in to weigh in on the whole merger concept, and he is wondering the same thing we are: just how big a factor is Netflix in all of this?
Cramer noted, “But David, this is possible, I’m gonna throw a bomb at you. We all keep saying, well, Disney (DIS) can’t be Netflix (NFLX). Comcast (CMCSA) can’t be Netflix. Well because they have too much baggage with carriage, could this be any chance that they’ve been modelling this off of Netflix?” While admittedly, the idea that Netflix would buy Warner might seem like a bit of a long shot, there are certainly valid reasons to get in on that action. Production facilities and a huge content library would likely outweigh the image dissonance that comes from the anti-cable owning a major cable operation.
Is WBD Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on WBD stock based on five Buys and nine Holds assigned in the past three months, as indicated by the graphic below. After a 138.80% rally in its share price over the past year, the average WBD price target of $15.12 per share implies 24.19% downside risk.
