The latest rally in Warner Bros Discovery stocks could not be held if the purchase bid from Paramount Skydance doesn’t come true, TD Cowen said this week. The company downgraded its holdings after the recent shares rose sharply beyond its $14 price target. This means downside 28% from Monday’s closing price. Warner Bros Discovery stocks skyrocketed more than 67% this month after CNBC learned that Paramount Skydance was working with investment banks to prepare a Warner Bros Discovery offer. Paramount Skydance shares also rose more than 26% this month. WBD 5D Mountain WBD, 5 Days “PSKY could receive bids of over $20, but given the possibility that WBD shares would quickly close at $11-12 if the bids are not realized, he doesn’t love risk rewards here. “Reports on potential transactions do not have specific details or confirmations from any of the parties involved. The best move is to admit that there is no particular advantage in the situation and not move to the bystanders. That’s what we’re doing here.” Kruts believes that a bid will come, and that acceptance and regulatory approval is high, but he pointed out there are many hurdles that could get in the way. Additionally, if a bid is issued, analysts believe that the number of potential suitors bid for the company is “limited.” “I think Comcast’s regulatory hurdle is much higher than PSKY given Trump’s hostility towards most legacy media companies. The capital commitment required to trade is probably too much for Sony. I also don’t expect to see other big tech companies that choose to compete with PSKY (because PSKY’s potential synergy with WBD is much higher). Wall Street is pretty divided into names. Certainly, 14 of the 27 analysts covering Warner Bros. Discovery have a strong purchase or purchase rating. 13 others, including Kruts, have a hold rating. In pre-market trading on Tuesday, stocks fell by more than 2%.
