Cautious Outlook on Warner Bros: Revenue Decline and Strategic Challenges Highlighted

Needham analyst Laura Martin has maintained their neutral stance on WBD stock, giving a Hold rating on May 6.

Laura Martin’s rating is based on several key factors influencing Warner Bros’ financial performance. The company’s reported revenue for the first quarter of 2025 was $9 billion, which is a 10% decline year-over-year and fell short of expectations by the same margin. Additionally, the adjusted EBITDA remained flat compared to the previous year and was 6% below estimates, while the EPS loss of $0.18, although improved by 53% year-over-year, was still below the anticipated loss of $0.09.
Martin projects negative revenue and adjusted EBITDA growth for fiscal year 2025, with only a modest 1% growth expected in 2026. She expresses a preference for Warner Bros as an investment when it can achieve mid-single-digit or higher revenue growth with expanding margins. Until such improvements are evident, she believes the likelihood of negative catalysts outweighs positive ones. Moreover, there are strategic concerns regarding Warner Bros’ ability to compete effectively, as it may be too small compared to its competitors, and this gap appears to be widening.

In another report released on May 6, Morgan Stanley also maintained a Hold rating on the stock with a $10.00 price target.