ViacomCBS, Discovery Stocks Plummet Back to Earth

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After shares of ViacomCBS and Discovery saw huge run-ups earlier this year on Wall Street enthusiasm about their streaming strategies, stocks of both companies took a sharp downward turn Friday. Vi…

saw huge run-ups earlier this year on Wall Street enthusiasm about their streaming strategies, stocks of both companies took a sharp downward turn Friday.

The steep declines for ViacomCBS and Discovery came after several analyst downgrades on the companies. The latest came from the team at Wells Fargo, which on Friday cut ViacomCBS from “equal weight” to “underweight” and lowered Discovery from “overweight” to “equal weight.” That said, Wells Fargo is upbeat on the prospects for Discovery Plus after a “strong start to the year” and pending international expansion with the Olympics. “We like the fact that Discovery Plus is a primarily incremental strategy and value it a premium on subs to peers,” Cahill said. “We also think DISCA has less core risk due to no licensing, set affiliate price increases, more international exposure and a bit more recovery momentum due to relative ad exposure.

Meanwhile, on Thursday, analyst firm MoffettNathanson downgraded ViacomCBS from “neutral” to “sell” and lowered its price target by to $55 per share .questioning how this will end up as a good trade,” analyst Michael Nathanson wrote. He also cited “increased worries” about linear affiliate fee growth, saying that ViacomCBS run a greater risk getting dropped by pay-TV providers and/or suffering lower annual price escalators because they are shifting premium content to their DTC platforms.

 

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