The firm raised its price target on Discovery to $46 from $24 a share.
Analyst John Hodulik said that early app data show that discovery+, Discovery's streaming service, is the fifth most downloaded subscription video on demand app. Nielsen data show that about 14 million U.S. SVOD homes watch at least 20 hours of flagship Discovery brands per month.
UBS expects Discovery to reach 8 million direct-to-consumer subs in the U.S. and 23 million globally this year.
While the firm is mostly bullish on the stock, and even nearly doubled its price target, the fact that it has risen about 150% this year has analysts concerned about valuation.
The new price target represents a 10 times Ebitda multiple, compared to a 7.5 times multiple prior and a 14 times multiple on free cash flow, compared to a prior multiple of 6 times.
Shares of Discovery dropped 7% to $69.32 in trading Tuesday.
Last month, Discovery said adjusted earnings for the three months ended were 76 cents a share, down 22.5% from the same period last year but 4 cents ahead of the Wall Street consensus forecast. Group revenue was essentially flat with last year at $2.886 billion and were modestly ahead of analysts' forecasts.
Ad revenue also was flat, Discovery said, but a 5% gain for distribution fees in the United States supported the group's top line.