Sinclair Broadcast Group, Inc. (SBGI) shares rose about 30% during Monday's session after the company purchased more than 20 regional sports networks and Fox College Sports from The Walt Disney Company (DIS). Under the terms of the deal, Sinclair will pay $9.6 billion for the assets valued at $10.6 billion, including minority equity interests. The regional network had $3.8 billion in revenue and 74 million subscribers last year.

Sinclair CEO Chris Ripley told Reuters in an interview that the company would be open to a deal with Amazon.com, Inc. (AMZN) and other tech giants to live-stream sports. Sinclair is interested in securing distribution that is as broad as possible, which could open the door to high-margin licensing income streams.

Analysts reacted favorably to news of the acquisition. B. Riley analyst Barton Crockett upgraded Sinclair stock from Neutral to Buy and raised the firm's price target from $46.00 to $57.00 following the purchase, saying that the deal "looks like a home run." Stephens analyst Kyle Evans also raised his price target on Sinclair shares to $50.00 from $45.00, saying that the reasonable purchase price and low risk make the recent deal a solid acquisition.

Technical chart showing the share price performance of Sinclair Broadcast Group, Inc. (SBGI)
StockCharts.com

From a technical standpoint, the stock broke out from its price channel stemming from the beginning of the year. The relative strength index (RSI) moved into overbought territory with a reading of 83.67, but the moving average convergence divergence (MACD) experienced a bullish crossover and continuation of its prior uptrend. These indicators suggest that the stock could see some consolidation, but the intermediate trend remains bullish.

Traders should watch for some consolidation above trendline support and R2 levels of $51.17 over the coming sessions, which could become a new major support level for an extended move higher. If the stock breaks below these levels, traders could see a move back into the prior price channel, although that scenario appears less likely to occur. 

The author holds no position in the stock(s) mentioned except through passively managed index funds.