Discovery Stock Price Target Raised by Analyst on Early Rich Ross Success

Another analyst raises his target price on Time Warner shares while lowering his target on CBS Corp.

Nomura analyst Anthony DiClemente on Tuesday raised his price target on the stock of Discovery Communications, citing the early success of Rich Ross at Discovery Channel, among other things.

In a report entitled "Rich's Revival?‎", he wrote: "Although we maintain a number of industry-related concerns which apply to Discovery, we wanted to highlight three catalysts that could have a favorable near-term impact on the stock."

First, he said, "Rich Ross’ programming strategy appears to be resonating with Discovery Channel’s audience, driving ratings growth at the company’s flagship network for three consecutive months."

Also, "an imminent potential contract renewal with Comcast could provide relief to a previous investor concern," DiClemente said. Third, Discovery’s upcoming analyst day on Sept. 29 could boost the stock "as analyst days have typically been a positive catalyst for media names in the past, namely Disney, TW and Fox."

DiClemente raised his target price on the stock by $3 to $34 to account for the catalysts.‎

Also on Tuesday, Guggenheim Partners analyst Michael Morris raised his target price on Time Warner shares by $3 to $98, saying the conglomerate "remains on track for content-driven growth."

‎"We have updated our TW model ahead of second-quarter earnings with modest changes reflecting slightly stronger film and slightly weaker advertising performance," he said. "We see TW as assertive in addressing media-industry challenges and view the growth potential of an HBO OTT service as a key differentiator."

Morris also lowered his CBS Corp. price target by $2 to $64, saying he was "tempering" his near-term outlook "primarily due to higher content costs and lower ad revenue than previously forecast at the CBS Network." But he also reiterated that the company had "content growth potential [that is] still healthy."

Twitter: @georgszalai

 

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