Warner Bros. Discovery slips even as Cowen upgrades on potential for improved performance
Warner Bros. Discovery (NASDAQ:WBD) shares slipped early Thursday even as investment firm Cowen upgraded the media and entertainment company, highlighting a disciplined management team and the potential for "improved Warner performance" under new leadership.




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Analyst Doug Creutz raised his rating on Warner Bros. Discovery (WBD) to outperform from market perform, but lowered the price target to $24 from $31, noting that under Chief Executive David Zaslav, there is a "real opportunity" to boost productivity and efficiency.
"We expect management to improve the performance of the Warner assets, given what we view as undermanagement by its previous telephone company owners," Creutz wrote in a note to clients, adding that it's likely that more than $3 billion in cost synergies will be realized, citing the company's previous Scripps acquisition. 
"We believe that investments will be managed more carefully going forward (with the almost immediate shutdown of CNN+ post-merger close being a prime example)," Creutz explained, while noting that monetization of its assets is also likely to get better due to "a more flexible strategy."
Warner Bros. Discovery (WBD) shares slipped nearly 1% to $16.50 in premarket trading on Thursday.
In addition, Creutz noted that Warner Bros. Discovery (WBD) has enough quality and quantity of content to compete with Netflix (NFLX) and Disney (DIS), citing its DC Comics unit, Lord of the Rings, Harry Potter, Game of Thrones and Looney Toons.
On the company's recent earnings call, Zaslav specifically pointed to DC Comics as an area for improvement.
"Perhaps more importantly, we view management's commitment to not try and 'win the OTT spending war' as a relief and more supportive of a sustainable path towards whatever mix of linear and OTT the future of media holds," Creutz added.
The analyst also noted that company performance will depend on how well Zaslav merges the two cultures of Discovery and Warner Media while also navigating Hollywood relationships, but given the fact it has just 20% of its revenue tied to advertising, a potential economic downturn should not be "too burdensome" on the company.
Earlier this week, Warner Bros. Discovery (WBD) and Roku (ROKU) signed a deal to launch the Discovery+ streaming service as a premium outlet on the Roku Channel.