Warner Bros. Discovery stock rises on Wells Fargo, Wolfe Research upgrades

Yahoo Finance Live anchors Julie Hyman and Brad Smith discuss the pop in stock for Warner Bros. Discovery following upgrades from Wells Fargo (Overweight) and Wolfe Research (Outperform).

Video transcript

JULIE HYMAN: Let's also talk about Warner Brothers Discovery. That stock is popping after upgrades from Wells Fargo and Wolfe Research. Wells is lifting its rating to overweight. Wolfe Research upgrading the stock to an outperform here this morning. And you can see, obviously, the shares are benefiting from it.

And I'm just looking through the Wells Fargo call this morning and saying that they've been trending more positive on Warner Brothers Discovery because of synergies and execution. And they basically say that even though the macro environment doesn't look great right now, that the company is delivering and that it is doing well in this environment. So kind of interesting here.

BRAD SMITH: This was a fun note to read. They said we threw everything in the kitchen sink at the downside case scenario. So they really tried to make the case for, all right, here's all the reasons why it should not be a bull case, and they still ended up with Warner Brothers Discovery delivering 3x growth by '25, 2025. So they have conviction in the free cash flow limit to limit downside while the stock has asymmetric upside, they're saying. And they have a $20 price target that they put on the shares. As you're seeing there, on the day, shares are sitting around $14.70 here.

And with all of that in mind, they said their upgrade is predicated on de-risking the downside, but there are bullish themes, DTC, Direct To Consumer, and that content and HBO currently undervalued versus their peers, given the near-term breakeven and future profit ramp that they're seeing there. So that part of their bull case for Warner Brothers Discovery.