Steer clear of Warner Bros. Discovery stock for now -- Paramount Skydance pausing its acquisition of the entertainment company means there's just too much uncertainty for investors.
That's according to Seaport Research Partners analyst David Joyce, who downgraded Warner shares to Neutral from Buy on Sunday.
"With this additional delay and potential uncertainty, we think there are better areas to deploy capital," Joyce wrote in a research note.
Paramount said on Friday that it would pause its takeover of Warner until it either resolves legal challenges to the deal or June 1, 2027 -- whatever comes first.
Paramount agreed in February to buy Warner for $31 a share in cash, but 12 states and the Writers Guild of America have challenged the $110 billion transaction, arguing that it violates antitrust laws.
Shares of Warner dipped 0.7% to $25.60 ahead of Monday's opening bell -- a 21% discount to the $31 a share price Paramount is set to pay if the deal does go ahead.
Merger uncertainty isn't the only reason that Joyce feels bearish about the stock. He also cut his second-quarter revenue and adjusted earnings before interest, taxes, depreciation, and amortization estimates, citing the weak box-office performance of Warner's Supergirl.
The superhero movie netted just $124 million, Joyce noted, "not even covering the production costs let alone marketing."
Warner is set to report its second-quarter earnings before the market opens on Aug. 6. Paramount's own results are due up after the closing bell on Aug. 4.
Write to George Glover at george.glover@dowjones.com
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July 27, 2026 08:32 ET (12:32 GMT)
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