Warner Bros. Discovery Analyst Slashes 3Q Estimates Citing FX Headwinds, Tougher Comps


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  • Needham analyst Laura Martin reiterated the Hold on Warner Bros. Discovery, Inc (NASDAQ:WBD).
  • Martin cut her 3Q22 revenue, operating income, and EPS estimates for WBD.
  • She reduced her advertising revenue estimate by 10% (to down 9% Y/Y) to reflect WBD guidance of high single to low double-digit declines, owing to current scatter market softness.
  • She cut her distribution revenue estimate by 2% (down 3% Y/Y) due to linear TV sub losses.
  • She saw more significant FX headwinds than previously anticipated.
  • She saw tougher comps because last year benefited from the Summer Olympics (held in 3Q21).
  • These negative adjustments were partially offset by higher content revenue because WBD licensed the Lord of the Rings library movies to Amazon.com Inc (NASDAQ:AMZN) to coincide with its streaming release of The Rings of Power, higher cost synergies at WBD, and higher share count.
  • Price Action: WBD shares traded higher by 4.02% at $12.82 on the last check Tuesday.

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