Earnings Previews: AES, AMC, Block, Virgin Galactic, Warner Bros Discovery

Analysts are mixed on Virgin Galactic stock. Of 11 brokerages covering the shares, just two have a Buy rating, while six more have a Hold rating and the other 3 have a Sell or Strong Sell ratings. At a share price of around $7.80, the stock is almost fully valued, based on a median price target of $8.00. At the high target of $16.00, the upside potential is around 105%.

Virgin Galactic is expected to report revenue of $80,000 for the second quarter, down about 75.7% sequentially and by 86.0% year over year. Analysts also expect a loss per share of $0.36, flat sequentially and worse than the year-ago loss of $0.19 per share. For the full year, the company is expected to post a loss per share of $1.50, compared to last year’s loss of $1.43 per share, on sales of $1.8 million, down 45.3% year over year.

The company is not expected to post a profit in 2022, 2023 or 2024. Virgin Galactic’s enterprise value-to-sales multiple for 2023 is 34.2 based on sales of $38.11 million. For 2024, the multiple is 13.7, based on estimated sales of $94.82 million. The stock’s 52-week range is $5.14 to $35.62. Virgin Galactic does not pay a dividend, and the total shareholder return for the past 12 months was negative 75.4%.

Warner Bros. Discovery

Media company Warner Bros. Discovery Inc. (NASDAQ: WBD) sprung to life just over three months ago following the merger of Discovery with AT&T’s WarnerMedia. Since then, the share price has tumbled by 45%. The stock has bounced back a bit from its post-merger low set in late June, rising by about 21.5%.

Layoffs are expected after the company reports results Thursday afternoon, as high production costs and anticipated lower consumer spending on entertainment cut into revenue and profits. The company reportedly killed its nearly finished “Batgirl” project and has no plans to release the film either to theaters or to HBO Max. That’s $70 million in production costs down the drain, according to the New York Post.

Of 24 analysts covering the stock, there are nine Hold ratings and 14 ratings of Buy or Strong Buy. At a share price of around $16.00, the implied gain based on a median price target of $26.00 is 62.5%. At the high price target of $52.00, the implied gain is about 225.0%.

Second-quarter revenue is forecast at $11.9 billion. Because this is the new company’s first quarter, comparable data is not available. Adjusted EPS are forecast at $0.12. The estimates for the full year call for EPS of $0.75, down 10%, on sales of $48.11 billion.

Warner Bros. Discovery stock trades at 21.4 times expected 2022 EPS, 7.1 times estimated 2023 earnings of $2.25 and 6.0 times estimated 2024 earnings of $2.69 per share. The stock’s post-merger range is $12.91 to $27.50. The company does not pay a dividend, and the total shareholder return for the past year is negative 45%.

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