Rosenblatt starts Warner Bros. Discovery at Sell, expecting muted cash flow
Warner Bros. Discovery (WBD
+0.2%) is among the weaker performers in the S&P 500 - only late on Tuesday making a run back into positive ground.
Its move down Tuesday came alongside a bearish take from Rosenblatt, which initiated coverage on a variety of tech and media names at Neutral, but saved stronger views for a few companies including WBD.
Rosenblatt thinks the deal between AT&T and Discovery improved both companies' positions with regard to streamlining costs and product offerings.
"But it does nothing to create new hit shows that would not have been made already by these companies separately," the firm notes. "And it doesn't change the fact that their streaming investments accelerate headwinds for secularly challenged TV channels."
As for Warner Bros. Discovery in particular, that nets out to a "muted" long-term trajectory in cash flow.
It's started WBD at Sell with a $20 price target, currently implying 18% downside.
The company is being buffeted with more bad news today, amid reports that it's suspending marketing its new CNN+ streaming service due to low traction so far.