Argus downgraded Warner Bros. Discovery (WBD) to Sell from Hold on Monday, a call that landed just as the media company's stock traded at its highest level in a year and its merger with Paramount Skydance moved toward the finish line.

WBD stock trades at $30.90, just under its 52-week high of $30.92. That price sits right beneath Paramount's $31 offer, leaving little room left to climb. With the gap between the stock price and the takeover bid having narrowed sharply, Argus sees little upside left for anyone holding on at current levels. That setup is classic merger-arbitrage territory: once a target trades this close to a buyout price, its day-to-day moves tend to reflect the odds of the deal closing rather than the company's standalone prospects.

Analyst Joseph Bonner said a recent settlement of a multistate antitrust lawsuit cleared the way for the deal, and he expects the merger to close soon.

Separately, InvestingPro data flagged the stock as overvalued against its fair value estimate, and its RSI reading also points to overbought territory. The RSI is a momentum gauge generally read as overbought above 70.

Earnings Outlook

Argus forecasts a 2026 GAAP loss of $0.90 per share for WBD, followed by a return to a $0.07 profit in 2027. The firm projects long-term earnings growth of 6% a year, a figure that blends the company's streaming gains with weakness elsewhere in the business.

The segment results behind that outlook are mixed. Streaming revenue rose 10% to $3.1 billion in the second quarter, and adjusted EBITDA for the segment jumped 63% to $512 million. Networks adjusted EBITDA fell 5% to $1.45 billion, while Studios EBITDA dropped 89% to just $96 million. The split illustrates the transition reshaping legacy media, with streaming emerging as the growth engine even as profits in the traditional networks and studios operations contract.

Merger Progress

Paramount Skydance is moving through the final steps of the takeover. Citigroup is set to begin meetings with loan investors to help fund the deal.

Paramount is also negotiating with California's attorney general and has floated a $1.5 billion investment in the state to help clear legal hurdles.

The FCC approved foreign investment in the $110 billion deal, though foreign investors will not be allowed to hold voting stock.

With the antitrust suit settled and FCC clearance secured, the debt financing and the California talks stand out as the remaining milestones to watch as the close Bonner expects approaches.

Benchmark has kept a Hold rating on WBD stock through the talks, a signal that not every analyst agrees the upside is fully gone.

Argus also flagged risks outside the merger itself, pointing to a long decline in cable television and the loss of domestic NBA rights — structural pressures that shape the company's outlook regardless of how the merger concludes.

WBD stock has gained about 7% this year, a gain that trails a 12% rise in the broader market over the same stretch.