Bernstein SocGen Group has increased its 12-month price objective for Warner Bros. Discovery (NASDAQ:WBD) to $27.75 from $23.50, while maintaining a Market Perform rating on the shares. The move comes as the stock trades at $28.92 - above the revised target and close to its 52-week high of $30 - after a sharp 161% rise over the past year.
The research house emphasized the importance of the company's upcoming fourth-quarter earnings report, which it said is scheduled in just two days. Bernstein analyst Laurent Yoon identified Linear EBITDA as the most important metric to watch in that quarter, arguing the figure will shed light on the trajectory of Warner Bros. Discovery’s traditional TV business and the competitive dynamic around the ongoing sale process.
According to analysis included in the report, InvestingPro flags the stock as potentially overvalued at current levels. The InvestingPro notes highlighted in the firm’s data point to volatile price action and a high earnings multiple as concerns, marking those as two of 13 available tips for subscribers.
Bernstein does not anticipate the shares will move materially on the fourth-quarter results alone. The firm’s view is that much of the market’s attention is concentrated on the bid process for the company’s assets rather than on the quarterly numbers themselves. Yoon said that should management indicate a sharper-than-expected decline in the Linear business, Netflix would likely have to increase its bid to stay competitive - a move the market, in Bernstein’s view, is already pricing in.
Bernstein’s adjusted target of $27.75 explicitly reflects Netflix’s cash offer for Warner Bros. Discovery’s Studios and Streaming business, which the firm regards as a likely floor for the transaction. The analyst noted that recent investor conversations have been oriented largely around the progress of the deal process rather than the imminent earnings release.
Other developments in the acquisition contest were outlined in Bernstein’s note. Paramount is expected to present a revised takeover proposal of $32 per share, topping its prior $30 per share bid. Netflix has submitted a cash proposal at $27.75 per share. Warner Bros. Discovery is assessing whether to reopen sale discussions with Paramount and Skydance after receiving the amended offer, though no final decision has been taken.
Market participants have reacted to the shifting bid dynamics: Rothschild Redburn has downgraded Warner Bros. Discovery to Neutral from Buy, citing the increased probability that Netflix will be the successful acquirer. Raymond James observed that Paramount appears to be gaining momentum in its pursuit but may need to further raise its offer to secure the deal. Meanwhile, talks between Sky and ITV about a potential acquisition have slowed, with industry attention concentrated on the situation at Warner Bros. Discovery.
The confluence of near-term earnings, competing offers and investor scrutiny of Linear results leaves the stock positioned between deal-related valuation drivers and operational performance metrics. Bernstein’s adjusted target anchors on the Netflix offer, while market commentary and broker reactions underline the fluidity of the takeover process and its central role in shaping investor expectations.