More Record Highs for DISCA After Earnings, Revenue Beat

The shares of Discovery Communications Inc. (NASDAQ:DISCA) are surging this morning, up 8.1% to trade at a fresh all-time high of $54.92, after the major media name reported fourth-quarter earnings of 76 cents per share -- higher than Wall Street's estimates of 70 cents per share -- as well as a revenue beat. The company also noted streaming platform Discovery+, which was launched in February and houses 55,000 episodes from channels such as HGTV and the Food Network, may reach 12 million paid subscribers by the end of the month, boosted by pandemic-related stay-at-home recommendations.

Digging deeper, the equity has been tearing up the charts since late November, with support from the 40-day moving average. And while shares pulled back in January after an impressive bull gap, the security quickly resumed surging to break through overhead pressure at the $50 level. Over the past nine months alone, DISCA has added 168.2%. 

The brokerage bunch is still pessimistic towards the security, leaving ample room for upgrades and/or price-target hikes moving forward. Of the 17 analysts in question, 12 called DISCA a tepid "hold" or worse, while only five said "buy" or better. Plus, the 12-month consensus target price of $34.20 is a whopping 37.2% discount to the stock's current perch.

Short sellers are already hitting the exits in droves. Nonetheless, there is plenty of pessimism left to be unwound, which could push Discovery stock even higher. Short interest fell 21.6% in the most recent reporting period, but the 45.52 million shares sold short account for 29.5% of the stock's available float, or over a week's worth of pent-up buying power. 

If you are looking for a bargain, now could be a good opportunity to buy DISCA options. The stock's Schaeffer's Volatility Index (SVI) of 58% stands higher than 24% of all other readings in its annual range. In other words, options players are pricing in relatively low volatility expectations at the moment.