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

Warner Bros. Discovery Analyst Slashes 3Q Estimates Citing FX Headwinds, Tougher Comps
  • Needham analyst Laura Martin reiterated the Hold on Warner Bros. Discovery, Inc 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 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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