Zacks Investment Research upgraded shares of Discovery Communications Inc. (DISCA) from UNDERPERFORM to NEUTRAL on March 18, 2014, with a target price of $87.00.
Discovery Communications reported mixed financial results for the fourth quarter of 2013 wherein the bottom line surpassed the Zacks Consensus Estimate but the top line missed the same. Robust revenue and viewership growth coupled with rating improvement have encouraged the company to raise its guidance for 2014. Moreover, increased share repurchase plan and renewal of deals with Netflix and Time Warner Cable will act as catalyst for Discovery while moving ahead. As a result, we are upgrading our long-term recommendation on Discovery to Neutral from Underperform. However, deteriorating cash position coupled with mounting debt may act as headwinds for Discovery while moving ahead. Also, the failure to acquire Scripps Network is a major blow to the company's diversification goal.
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