Warner Bros. Discovery jumps after Wells Fargo ups price target on dealmaking buzz

Warner Bros. Discovery shares popped 7% Tuesday after Wells Fargo raised its price target on the media giant to $14 from $13 while keeping an equal-weight rating.

The bank’s optimism stemmed largely from the media giant’s potential for dealmaking. In June, WBD announced that it would split its operations into two companies, with the Streaming & Studios division (home to Warner Bros. Television, DC Studios, HBO, and Max) standing alone from the networks side (CNN, TNT Sports, and Discovery).

That separation could make the Streaming & Studios unit more attractive to buyers, the analysts said. They valued the segment at about $65 billion, which could translate to a takeover price north of $21 a share. Potential suitors range from Amazon and Apple to Sony and Comcast, though analysts flagged Netflix as the “most compelling” option despite its limited acquisition track record:

“While NFLX has historically not been acquisitive, [streaming and studios’] $12bn in annual content spend + library + 100+ acre studio lot offers a lot. It kickstarts a theatrical IP strategy, quickly scales video games and most importantly provides premium content to members.”

At Goldman Sachs’ Communacopia + Technology Conference this week, CEO David Zaslav also highlighted growing traction at HBO Max and hinted at future crackdowns on password sharing.

WBD shares are up 26% year to date, and up more than 93% over the past 12 months.