Redburn Atlantic upgraded media giant Warner Bros. Discovery (WBD) to “buy” from a previous investment rating of “neutral” on Thursday in light of recent takeover interest for its assets, notably from Paramount (PSKY).
The research firm noted that while Paramount is most likely to emerge as the best option for WBD, potential suitors also include Comcast (CMCSA), Netflix (NFLX), Amazon (AMZN), Disney (DIS), and Apple (AAPL).
When looking at revenue synergies, Redburn’s analysis suggests Disney has the greatest opportunity at $7B, followed by $5B at Paramount, $4B at Comcast, $3B at Netflix, and $1B at Apple. They see limited revenue synergies at Amazon.
They estimate cost synergies of $2B if Paramount buys all of WBD and around $1.3B for suitors looking to acquire just streaming and studio assets. From an affordability perspective, the deal seems feasible for all bidders, the research firm said.
WBD now has a price target of $28, implying an upside of 31.2%.