Wells Fargo analyst Steven Cahall upgraded Warner Bros. Discovery to Overweight from Equal Weight with a price target of $20, up from $13. The company’s free cash flow will limit downside, while the stock has "asymmetric upside," the analyst tells investors in a research note. The firm has been "trending more positive" on Warner Bros. Discovery due to synergies and execution. Wells also thinks company’s direct-to-consumer/HBO offering is currently undervalued versus peers given the "near-term break-even and future profit ramp." While a higher multiple thesis in a de-rating market may seem unlikely, comps and Warner Bros.’ "low absolute multiple mean the thesis can work," writes the firm.
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