BofA analyst Jessica Reif Ehrlich raised the firm’s price target on Warner Bros. Discovery (WBD) to $14 from $12 and keeps a Buy rating on the shares. After Comcast (CMCSA) last week announced a plan to spin out their cable networks, excluding Bravo and including some smaller digital assets, in a tax-free structure that will close in roughly one year, the firm sees “numerous potential partners/scenarios for the new Comcast SpinCo,” adding that it views Warner Bros. Discovery as one “very logical option.” In one “purely hypothetical example,” if Warner was to spin out their Studio and Streaming business, the firm thinks there would be “significant equity value creation” if the hypothetical remaining Linear assets would then be merged in an all-equity transaction with Comcast SpinCo to create a much larger vehicle, the analyst tells investors.
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