It didn’t take long after the Paramount (NASDAQ:PARA) and Skydance merger kicked in for reactions to start up. Some of them are positive, while some are downright distressing. But investors appear to be mostly glad it’s over and sent shares up over 2% in Tuesday afternoon’s trading.
Several major actors—perhaps themselves looking for work with Paramount—came out in favor of the new deal, calling it “…a win for the industry” as well as “…a match made in heaven.” Such words came from the likes of John Krasinski, Mark Wahlberg, and Tyler Perry.
Perry, for his part, called it “particularly exciting,” thanks in large part to David Ellison’s technological expertise. Krasinski looked forward to more work with the hopefully revitalized Paramount, and Wahlberg gave us the “win for the industry” line as he looks forward to starting a second film with Skydance.
Analysts, Meanwhile, Aren’t So Sure
Meanwhile, people with substantially less connection to Paramount had entirely different things to say. The word out of the analyst quarter did Paramount no favors. Four-Star analyst Peter Supino from Wolfe Research cut the rating on Paramount to Underperform from Peer Perform, noting that the completed deal will likely prove less than helpful, and the “…ever-pressured fundamentals” won’t give it any boosts either. Supino pointed out that 60% of Paramount’s revenue comes from TV media, which is in open decline.
Just to top it off, Moody’s warned that Paramount’s credit could go to junk status in the wake of the Skydance deal. But it wasn’t just the deal that hurt Paramount on this. Moody’s pointed to “…ongoing secular pressures on the company’s television networks and the slow pivot to reach direct-to-consumer (DTC) streaming scale…” for reasons a potential downgrade was likely.
Is Paramount a Buy, Hold, or Sell?
Turning to Wall Street, analysts have a Moderate Sell consensus rating on PARA stock based on two Buys, five Holds, and nine Sells assigned in the past three months, as indicated by the graphic below. After a 28.38% loss in its share price over the past year, the average PARA price target of $11.68 per share implies 2.19% upside potential.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
