What Does Discovery’s Newly Added Risk Factor Tell Investors?


Discovery (DISCA) is an American multinational media company with a presence in more than 220 countries. It operates television networks and digital media platforms. It recently introduced its Discovery+ streaming service in Canada and the Philippines. The company is in the process of merging with WarnerMedia.

With this in mind, let’s look at the company’s latest financial performance and understand what has changed in its risk factors. (See Insiders’ Hot Stocks on TipRanks)

3Q Financial Results

Revenue in the third-quarter of 2021 stood at $3.15 billion and was in line with the Street’s estimates. The company had reported revenue of $2.56 billion in the same quarter last year.

Discovery’s earnings for the quarter stood at $0.24 per share, compared to $0.44 per share in the same quarter last year. The figure missed the consensus estimate of $0.38 per share. The company ended the quarter with $3.1 billion in cash. (See Discovery stock charts on TipRanks).

Risk Factors

According to the new TipRanks’ Risk Factors tool, DISCA’s main risk category is Finance & Corporate, which accounts for 41% of the total risks identified for the stock. The company recently added one new risk under the Finance and Corporate risk category.

Discovery has informed investors that its stock price has been highly volatile lately, and it may continue to be, due to factors beyond its control. It mentions changes in short interest, analysts’ comments and uncertainties related to the COVID-19 pandemic as some of the factors that have caused the fluctuations in the stock.

The Finance & Corporate risk factor’s sector average is at 42%, compared to Discovery’s 41%. Shares of the company have declined about 13% year-to-date.

Analysts’ Take

On November 8, Macquarie analyst Tim Nollen upgraded Discovery to Buy from Hold with a $40 price target. Nollen’s price target suggests 52.21% upside potential.

Overall, consensus among analysts is a Moderate Buy based on 3 Buys and 5 Holds. The average Discovery price target of $32.57 implies 23.93% upside potential to current levels.

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