Shares in Discovery soared on Friday after a Bank of America analyst upgraded the company’s stock ahead of a proposed merger with AT&T’s WarnerMedia.
On Friday, shares in Discovery rose by $4.34, or nearly 17 percent, to $30.06 on the NASDAQ Exchange after entertainment analyst Jessica Reif Ehrlich issued a price target of $45 for the company’s shares, well above Friday’s closing price.
“As a combined entity we believe Warner Bros. Discovery has the potential to be a dynamic global media company. We believe this combination will enable Warner Bros. Discovery to create a tier 1 global streaming platform,” to rival Netflix and Disney+, Reif Ehrlich wrote in a Jan. 7 investor note.
In May 2021, Discovery unveiled its proposed megamerger with WarnerMedia, with David Zaslav to serve as CEO of the new company. AT&T and Discovery combining their media and entertainment assets into a media joint venture aims to bring together TV channels like CNN, TBS, TNT, HGTV, Food Network and Discovery Channel, the Warner Bros. film studio, and streaming services HBO Max and Discovery+.
“Under the right management … we believe Warner Bros. Discovery … has the potential to create a global media powerhouse driven by creative and content leadership,” Reif Ehrlich added in her bullish commentary as she upgraded Discovery shares to buy, from neutral.
Discovery sees the closing of the WarnerMedia transaction to occur in mid-2022, subject to approval by Discovery stockholders and additional closing conditions. No approval is required by AT&T shareholders.
