Analyst Note| Neil Macker, CFA |
Discovery posted a strong second quarter as revenue was in line with and adjusted EBITDA beat FactSet projections. The results reflect the impact of COVID-19 as advertisers deferred or canceled standing orders. We expect that this trend will continue through the third quarter as the firm is exposed to travel and retail in the U.S. Despite top- and bottom-line declines, the firm generated $991 million in free cash flow in the quarter and management will resume its equity-buyback program due to the firm’s strong $1.7 billion cash position. We're maintaining our narrow moat rating and $28 fair value estimate.