Market Overview

After 30% Gain, Pivotal Says The Time To Buy Discovery Communications Has Passed

Share:
After 30% Gain, Pivotal Says The Time To Buy Discovery Communications Has Passed

Pivotal Research Group upgraded Discovery Communications Inc. (NASDAQ: DISCA) in early June to a bullish stance, and investors who bought at the time were rewarded with a 30-percent return in two short weeks.

The Analyst

Analyst Brian Wieser downgraded Discovery Communications from Buy to Hold with an unchanged $28 price target.

The Thesis

An upgrade of Discovery in early June was "opportunistic," and Pivotal's prior price target increase from $24 to $28 was based on a more positive view of expected synergies from the Scripps transaction, Wieser said in the upgrade note. (See the analyst's track record here.)

Discovery shares have soared since the upgrade to the point where a bullish stance is no longer justified, Wieser said. 

Multiple "legitimate concerns" surrounding the stock remain, the analyst said:

  • A reliance on a small number of core network brands.
  • Investor perceptions, warranted or not, of the "death of TV advertising." 
  • A deceleration in pay TV subscription growth or average revenue per user.

It is unlikely any larger media property sees an urgent need to pursue an acquisition of Discovery, Wieser said.

The company is still in a position to generate returns to investors, but with the stock trading near $28 per share, prospective buyers may be overpaying, the analyst said. 

Price Action

Shares of Discovery Communications were trading lower by 1.5 percent at the time of publication Monday morning.

Related Links:

Macquarie: Discovery Communications Could Be In Play As A Buyer Or A Seller

Exploring An Upgrade On Discovery Communications, Questions Remain

Latest Ratings for DISCA

DateFirmActionFromTo
Dec 2019MaintainsOverweight
Nov 2019MaintainsNeutral
Nov 2019Initiates Coverage OnNeutral

View More Analyst Ratings for DISCA
View the Latest Analyst Ratings

Posted-In: Brian Wieser Pivotal Research Group scripps network tvAnalyst Color Analyst Ratings Media Best of Benzinga

 

Related Articles (DISCA)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
VIACJP MorganReinstates50.0
NUVASVB LeerinkMaintains92.0
SRPTCantor FitzgeraldMaintains211.0
SRPTPiperJaffrayMaintains210.0
LULUGoldman SachsMaintains219.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com

SNB Preview: Leaving The Door Open For Intervention, Just In Case

A Defensive Play: Morgan Stanley Upgrades The Utilities Sector