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NEW YORK (TheStreet) -- Discovery Communications (DISCA) - Get Discovery, Inc. Class A Report shares are down 2% to $36.26 on Thursday after the company was downgraded to "neutral" from "buy" by analysts at Nomura Group.

The firm also lowered the company's price target to $36 from $44.

Nomura cited, "Slowing international ad growth including headwinds from F/X, Russia, and the core; potential US affiliate fee slowdown due to distributor consolation and other affiliate fee growth concerns; ongoing mixed results for US TV ratings (both sector-wide and company-specific); and valuation relative to growth, as we now model Discovery's EBITDA growth as more in line with its media peers," as reasons for the decreased outlook.

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The recent 11% uptick from the stock's 52 week low on October 15 represents a good opportunity for investors to "move to the sidelines", according to the firm.

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TheStreet Recommends

TheStreet Ratings team rates DISCOVERY COMMUNICATIONS INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate DISCOVERY COMMUNICATIONS INC (DISCA) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, compelling growth in net income, notable return on equity and attractive valuation levels. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • DISCA's revenue growth has slightly outpaced the industry average of 7.6%. Since the same quarter one year prior, revenues slightly increased by 9.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • DISCOVERY COMMUNICATIONS INC has improved earnings per share by 32.9% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, DISCOVERY COMMUNICATIONS INC increased its bottom line by earning $2.97 versus $2.52 in the prior year. This year, the market expects an improvement in earnings ($5.39 versus $2.97).
  • The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Media industry average. The net income increased by 26.3% when compared to the same quarter one year prior, rising from $300.00 million to $379.00 million.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Media industry and the overall market, DISCOVERY COMMUNICATIONS INC's return on equity exceeds that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: DISCA Ratings Report

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