Atlantic sees 80% upside in Warner Bros. Discovery after analyzing merger

Atlantic Equities analyst Hamilton Faber reiterates an Overweight rating on Warner Bros. Discovery saying an analysis shows a direct-to-consumer merger could be largely revenue neutral. An HBO Max/Discovery+ direct-to-consumer merger can be largely revenue neutral, the analyst tells investors in a research note. The firm’s analysis still suggests 80% upside to shares of Warner Bros. Discovery from current levels. It assumed the U.S. merger will see the immediate loss of 4M subscribers that currently take both services, along with 40% of Discovery+ subscribers being unwilling to accept a more than doubling in their monthly fee. However, the step up in Discovery+ average revenue per user can largely offset this churn and means the merger will be largely revenue neutral, contends Atlantic. The firm keeps a $22 price target on shares of Warner Bros.