12:47 PM EDT, 07/16/2024 (MT Newswires) -- Warner Bros. Discovery ( WBD ) has several top-tier assets but could create more shareholder value by exploring options, including a potential spin-off, as the company's current structure as a consolidated public entity is "not working," BofA Securities said in a note Tuesday.

Since the merger of Warner Media and Discovery in early 2022, Warner Bros. Discovery's ( WBD ) shares have plummeted by over 70% and many of the financial benefits expected from the deal have not materialized. Strategic alternatives such as company or asset sale, or merger could create more value for shareholders than maintaining the status quo, BofA said.

If Warner Bros. Discovery ( WBD ) spins off its direct-to-consumer and studio assets into a separate company while retaining most or all of the debt with its remaining linear assets, it would likely negatively impact the company's debt profile but could be quite accretive to equity value, according to the note.

For Q2, BofA said it expects the company's networks advertising to be down 9% year over year, reflecting continued challenging trends in the business.

BofA lowered its price target on Warner Bros. Discovery ( WBD ) to $12 from $14 and kept its buy rating.

Price: 7.79, Change: +0.37, Percent Change: +4.92