Morgan Stanley analyst Benjamin Swinburne attributes the recent weakness in shares of Netflix (NFLX) to concerns over a potential bid for Warner Bros. Discovery’s (WBD) Warner Bros. studio. The acquisition, if announced, could introduce strategic questions for Netflix and potentially face regulatory hurdles, the analyst tells investors in a research note. The firm says that while Netflix is the largest of the reported bidders, it may have the smallest synergy opportunity and toughest regulatory path. Morgan Stanley estimates a hypothetical Warner Bros. and HBO acquisition would be neutral to Netflix ‘s earnings but 10%-15% dilutive to free cash flow per share. The firm has an Overweight rating on Netflix with a $150 price target.
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