Wall Street analysts rerated Warner Bros. Discovery (NASDAQ:WBD) after the company reported its quarterly results on Thursday. The stock traded lower on Friday.
It reported fiscal second-quarter results on Thursday. The company reported a quarterly revenue of $9.81 billion, flat year-on-year (Y/Y) ex-FX growth, missing the analyst consensus estimate of $9.72 billion.
The earnings per share (EPS) of 63 cents topped the analyst consensus estimate of 22-cent loss.
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Needham analyst Laura Martin maintained a Hold on Warner Bros.
Bank of America Securities analyst Jessica Reif Ehrlich maintained a Buy on Warner Bros with a price forecast of $16.
Needham
Martin said WBD delivered second-quarter 2025 results ahead of expectations, driven by strong Studio performance. Revenue rose 1% year-over-year to $9.8 billion, beating her forecast by 3%, while adjusted EBITDA climbed 9% to $1.9 billion, 8% above her estimate.
EPS came in at $0.63 versus her projected loss of $0.21, aided by a $3 billion pretax gain from debt extinguishment.
Studios’ revenue surged 55% to $3.8 billion, with adjusted EBITDA of $863 million, fueled by successful theatrical releases. Global Linear Networks revenue fell 9% to $4.8 billion, while Streaming revenue grew 9% to $2.8 billion, generating $293 million in adjusted EBITDA compared with a loss a year ago.
Streaming subscribers climbed 22% year-over-year to 125.7 million, split between 57.8 million U.S. and 67.9 million international customers, with an ARPU of $7.14. WBD reaffirmed its 2025 streaming adjusted EBITDA guidance of at least $1.3 billion.
Martin highlighted the company’s focus on leveraging iconic IP franchises, targeting two to three major films annually, and improving theme park monetization through licensing deals.
She also noted significant deleveraging, with net leverage falling to 3.3x from over 5x at the merger’s close, and confirmed the planned 2026 split into two public companies remains on track.
Following the results, Martin projected 2025 revenue of $38.1 billion, adjusted EBITDA of $8.9 billion, and EPS of $0.36. For 2026, she forecast $38.2 billion in revenue, $9 billion in adjusted EBITDA, and a $0.35 loss per share.
Bank of America Securities
Ehrlich said WBD’s second-quarter results exceeded expectations, driven by strong Studio performance. Revenue of $9.8 billion and adjusted EBITDA of $1.95 billion topped her estimates of $9.6 billion and $1.79 billion, respectively.
Free cash flow of $702 million came in slightly below her $762 million estimate due to $250 million in separation costs.
Ehrlich attributed the adverse share reaction to management’s outlook for weaker second-half linear performance, likely driving downward Street revisions.
She said the announced corporate split and expected capital structures should reduce the impact of linear weakness on WBD’s equity value.
She cut her 2025 linear networks EBITDA forecast by $350 million, citing tougher year-over-year comparisons from unusually high content sales in 2024’s second half, higher sports rights costs following NBA-related acquisitions, and slowing streaming distribution revenue growth under a restructured HBO Max deal.
Still, she noted WBD maintained its streaming adjusted EBITDA outlook of at least $1.3 billion.
Following the update, Ehrlich lowered her 2025 revenue estimate to $37.7 billion from $38.2 billion and adjusted EBITDA to $8.63 billion from $8.9 billion.
She also reduced her 2026 adjusted EBITDA forecast to $9.0 billion from $9.2 billion, reflecting lower linear contributions partly offset by stronger Studios performance.
Ehrlich pointed to potential catalysts, including easing Studio comps, advertising recovery, direct-to-consumer growth, and strategic moves to unlock shareholder value.
Price Action: WBD stock is trading lower by 4.72% to $11.30 at last check on Friday.
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