Is Now the Time to Pull the Trigger on Discovery Stock? This Analyst Says ‘Yes’

By now you've heard the news: AT&T (T) is planning to split off and merge its WarnerMedia business, home to HBO Max (of Game of Thrones fame), with Discovery, Inc. Read More... The post Is Now the Time to Pull the Trigger on Discovery Stock? This Analyst Says ‘Yes’ appeared first on TipRanks Financial Blog.

Is Now the Time to Pull the Trigger on Discovery Stock? This Analyst Says ‘Yes’

By now you've heard the news: AT&T () is planning to split off and merge its WarnerMedia business, home to HBO Max (of Game of Thrones fame), with Discovery, Inc. () and its discovery+ media properties.

In the companies' announcement released Monday morning, AT&T and Discovery said the combination will "form one of the largest global streaming players," combining "WarnerMedia's premium entertainment, sports and news assets with Discovery's leading nonfiction and international entertainment and sports businesses to create a premier, standalone global entertainment company."

From AT&T's perspective, the deal will essentially split AT&T into two companies. Rump AT&T will receive $43 billion "in a combination of cash, debt securities, and WarnerMedia's retention of certain debt" to help it become "one of the best capitalized 5G and fiber broadband companies in the United States." Meanwhile, AT&T's media properties (HBO, etc.) will spin off to join with Discovery to become a "'pure play' content company [with] one of the deepest libraries in the world."

This "pure play" company, yet to be named say the parties, will come into existence when the deal closes in mid-2022. Shortly thereafter, the parties anticipate the media company to boast $52 billion in annual revenue, "adjusted EBITDA of approximately $14 billion, and an industry leading Free Cash Flow conversion rate of approximately 60%" (which appears to imply annual free cash flow on the order of $31.2 billion) once it has achieved its target of "at least $3 billion in expected cost synergies annually."

Unsurprisingly, it's the new-born media conglomerate that investors are fixating on today, with Barrington analyst James Goss, for example, lauding its "vast assets in scripted plus unscripted" television content, and its $20 billion in annual spending on new content.

The combined company, says Goss, will include "the top television studio in terms of output," "the #2 film studio," and "a suite of content spanning sports, news, family, scripted and unscripted content," boasting significant U.S. market share and also "a substantial international presence" that can "reach consumers in over 200 countries globally." This would all make for, says Goss in a significant understatement, "a highly attractive streaming product."

Accordingly, even though current Discovery shareholders will control only 29% of the shares of the combined media company, Goss is reiterating his Outperform (i.e. Buy) rating on Discovery shares, and his $50 price target on those shares. (To watch Goss' track record, )

Speaking of those shares, Goss points out that one advantage of the merger will be significant simplification of Discovery stock, as "the three-class Discovery common share structure [is] collapsed into one." This one class of Discovery stock, by the way, is on track to earn only $2.95 per share this year (down 8% from 2020, when most of the world's population as stuck at home watching TV). By 2022, however, the year of the merger, Goss anticipates that Discovery will be back on a growth path with or without HBO, et al, earning $3.50 per share and thus growing its profits nearly 19% year over year.

In terms of DISCA's Street consensus, analysts are split almost right down the middle. Out of 15 total analyst ratings published in the last three months, 7 say Buy while 8 suggest Hold, making the consensus a Moderate Buy. In addition, the average price target of $47.71 amounts to ~39% upside potential. (See DISCA stock analysis on TipRanks)

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

The post Is Now the Time to Pull the Trigger on Discovery Stock? This Analyst Says ‘Yes’ appeared first on TipRanks Financial Blog.

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Air Canada Partners With Edmonton International Airport to Reduce Carbon Emissions

Air Canada (AC) and Edmonton International Airport (EIA) have signed a historic green partnership to reduce carbon emissions and promote a more sustainable and greener aviation industry. Shares of Canada’s largest airline jumped 3% after the announcement.   The IEA-Air Read More... The post Air Canada Partners With Edmonton International Airport to Reduce Carbon Emissions appeared first on TipRanks Financial Blog.

Air Canada Partners With Edmonton International Airport to Reduce Carbon Emissions

Air Canada (AC) and Edmonton International Airport (EIA) have signed a historic green partnership to reduce carbon emissions and promote a more sustainable and greener aviation industry. Shares of Canada’s largest airline jumped 3% after the announcement.  

The IEA-Air Canada Sustainability Partnership is the first agreement in Canada intended to reduce the carbon footprint of air travel. The two organizations will work together and focus on initiatives promoting a greener environment in various areas. 

Myron Keehn, Vice President of Air Service and Business Development at Edmonton International Airport said, "Finding good partners who share our core values is critical. Air Canada is passionate about reducing its environmental impact and our partnership shows how airlines and airports can work together to promote a sustainable future. This is only the beginning as we know that there are tremendous opportunities to lead in both an environmentally and economically sustainable way." 

Samuel Elfassy, Vice President of Safety at Air Canada said, "This partnership with Edmonton Airports is an important step towards our midterm 2030 objectives that roll up into our overall net-zero by 2050 emissions goal. We look forward to working together in developing innovative, long term, sustainable airport and ground operations emission reductions that could potentially be scaled at other airports in Canada and internationally." 

These commitments will attract further investment to the Edmonton Metropolitan Region and create highly skilled jobs as the region moves towards a greener economy. (See Air Canada stock analysis on TipRanks) 

Last week, TD Securities analyst Tim James upgraded AC to Buy from Hold and raised its price target to C$30.00 (from C$28.00), for 15.4% upside potential.  

James believes that the decline in COVID-19 cases in Canada and a "rapidly increasing" portion of the population that is vaccinated are positive catalysts for Air Canada’s stock. 

The rest of the Street is cautiously optimistic on AC with a Moderate Buy consensus rating based on 7 Buys and 3 Holds. The average analyst price target of C$30.10 implies 17% upside potential from current levels. Shares have risen nearly 15% year-to-date. 

TipRanks’ Smart Score 

AC scores an 8 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock’s returns are likely to outperform the overall market. 

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