On Wednesday, Guggenheim maintained its Buy rating on Warner Brothers Discovery (NASDAQ:WBD), with a consistent price target of $9.00. The firm adjusted its model for the media conglomerate, taking into account various factors that are expected to influence the company's financial performance.
The revised model indicates a slight increase in Warner Bros. Discovery's third-quarter total company revenue, now forecasted at $9.98 billion, up from the previous estimate of $9.91 billion. This adjustment reflects a mix of headwinds and tailwinds, including a weaker Networks advertising outlook and higher revenue from Olympics sublicensing.
Despite the revenue adjustment, the company's adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) forecast for the third quarter has been slightly reduced to $2.44 billion, compared to the prior forecast of $2.46 billion. However, Guggenheim's full-year adjusted EBITDA estimate remains unchanged at $8.92 billion.
The firm also provided insights into Warner Bros. Discovery's cash flow situation. The third-quarter free cash flow forecast has been lowered to $487 million, reflecting the timing of the company's semi-annual cash debt payment. Nonetheless, the full-year free cash flow outlook is largely unchanged at $3.84 billion, which represents a free cash flow conversion rate of 43.0%.
Guggenheim's continued confidence in Warner Bros. Discovery is signified by the maintained Buy rating and $9 price target, suggesting a positive outlook for the company's stock performance.
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