Streaming giant Warner Bros. Discovery (NASDAQ:WBD) and its new listing, WBD stock, just launched.
It was formed when AT&T (NYSE:T) spun off Warner Media, which then combined its media assets with Discovery. At the same time, AT&T will continue on its own. Some of the products you can expect from the newly formed company include CNN, HBO, HGTV, Food Network, TNT, Travel Channel, Animal Planet, New Line Cinema, Cartoon Network, Adult Swim, Turner Classic Movies and more.
While WBD stock initially soared about 8% on the open, shares sank with the broader market. But don’t write it off just yet. Not only will the deal shake up the industry, we could be looking at a digital entertainment giant.
Better, analysts have high expectations for the Warner Bros. Discovery stock. In fact, according to Bank of America (NYSE:BAC) analyst Jessica Reif, “The combination of these highly complementary assets, has the potential to create a global media powerhouse… If you step back, this is probably going to be the broadest offering the market has yet to see,” as quoted by Yahoo Finance.
Deutsche Bank (NYSE:DB) raised its target to $48, naming Warner Bros. Discovery a top pick. Atlantic Equities upgraded the stock to “Overweight,” with a $40 price target.
Evercore ISI analyst Vijay Jayant upgraded the stock to “Outperform” with a $45 target. Jayant also believes the stock is undervalued, as “the first direct-to-consumer free cash flow machine,” as noted by NextTV contributor Jon Lafayette.
Even better, industry analysts say the $43 billion giant could put it in striking distance of Netflix (NASDAQ:NFLX) and Disney+ (NYSE:DIS), too.
“Hypothetically a new combined entity will be a stronger competitor,” Parks Associates analyst and Director of Research Paul Erickson told TheWrap. “HBO Max on its own merits is already breaking into that third position, squarely in contest with all of the members of the Disney bundle [Disney+, Hulu and ESPN+].”
In short, we could be looking at an insanely big opportunity here.
Shares of WBD stock last traded at $24.03, down 1.8% on the day.
On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
