UBS Says Sell Discovery As Streaming Upside Captured, Stock Falls 5% By

© Reuters.

By Dhirendra Tripathi – Discovery (NASDAQ:) shares fell 5% Tuesday after UBS said to sell the stock.

Even after the fall, UBS’s $46 price target is still 24% lower than the current price.

Discovery shares have risen by almost 284% from their lows last year, and UBS believes the current stock level poses a challenge to the risk-reward ratio as the gains from its streaming service Discovery+ appear to be priced in. The brokerage downgraded the stock from neutral.

UBS said while Discovery+ appears off to a strong start, it remained concerned regarding the ultimate scalability of the service in relation to the decline of the linear business and longer term impact on financials.

“We expect relatively stable EBITDA/FCF through 2024 as DTC growth is balanced against linear declines. Nonetheless, shares are trading at all-time high valuations and upside in streaming appears more than priced in. We estimate the implied valuation of the DTC business at 20x ’23E revenues, well ahead of NFLX’s historical range (6-10x),” StreetInsider quoted UBS as saying in its report.

UBS’s downgrade of Discovery follows last week’s similar action by Macquarie, which pegged its target for the stock at $52.


Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Most Related Links :
Business News Governmental News Finance News

Need Your Help Today. Your $1 can change life.

[charitable_donation_form campaign_id=57167]

Source link

Back to top button