Market Overview

Pivotal Lifts Sell Rating Off Of Discovery's Stock

Share:
Pivotal Lifts Sell Rating Off Of Discovery's Stock

The bearish case for Discovery Communications Inc. (NASDAQ: DISCA) can no longer be justified after the company's CEO spoke at the 46th Annual UBS Global Media and Communications Conference this week, according to Pivotal.

The Analyst

Pivotal Research Group's Brian Wieser upgraded Discovery from Sell to Hold with an unchanged $27 price target.

The Thesis

Discovery CEO David Zaslav spoke Monday and issued several cautious comments, including saying its flagship Discovery Channel "has some ratings challenges." Wieser said The main takeaway from the presentation is that the executive lowered expectations for advertising growth just a few weeks after initially setting them.

Pivotal's first-hand checks and conversations with national TV buyers suggests Discovery's problems extend beyond recent weakness at its flagship network, the analyst wrote in the note. Specifically, the company faces "unrealistic expectations" related to how much revenue the combination of Scripss and Discovery would realize as one entity. In addition, the conversations with TV buyers suggests the scatter market is "relatively soft."

Wieser said the TV business remains a "melting iceberg" characterized by declining ad revenues with slightly increasing distribution revenues but gradually worsening margins. As such, management's concerning comments this week has a minimal impact on valuation due to the negative longer-term view on the sector; With the stock trading near the firm's $27 price target, a Sell rating can no longer be justified.

Price Action

Shares of Discovery were trading higher by 1.3 percent to $28.27 Thursday morning.

Related Links:

Tiger Woods, Discovery Strike Content Partnership

Discovery Communications' 20% Gain Difficult To Justify, Pivotal Says In Downgrade

Latest Ratings for DISCA

DateFirmActionFromTo
Sep 2019Initiates Coverage OnOutperform
Aug 2019MaintainsIn-Line
Jun 2019MaintainsIn-Line

View More Analyst Ratings for DISCA
View the Latest Analyst Ratings

Posted-In: advertising Brian Wieser David Zaslav Pivotal Research GroupAnalyst Color Upgrades Price Target Analyst Ratings Best of Benzinga

 

Related Articles (DISCA)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
NVDACascendMaintains220.0
ADBECleveland ResearchInitiates Coverage On283.0
IMOCiBCUpgrades
RETAJefferiesMaintains254.0
SNAPAreteUpgrades
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
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.
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

IGC Resources, Westleaf Cannabis Complete $14.9M Raise

Aphria's Sell-Off Is Burning Cannabis Stocks