The news already wasn’t good yesterday, when media giants Paramount (NASDAQ:PARA) and Skydance discovered that Paramount might need to raise another $3 billion in equity just to get the deal to go through. And now, another hiccup has hit, and that was enough to send Paramount shares down nearly another 3% in Friday afternoon’s trading. So what happened this time? Turns out that Skydance isn’t interested in a complete takeover of Paramount after all.
While the Paramount deal would be somewhat complex to start with—Paramount is owned by National Amusements, and it might not be interested in any kind of partial deal—it only gets worse when you consider that some of the potential buyers may not want the whole thing. Skydance, for its part, revealed that it was interested in a “..substantial minority stake” or a “…small majority stake,” in which it would bring its own studio assets to Paramount’s operations. This may taint the deal, but reports suggest that Shari Redstone of National Amusements is already set to sell her own stake to Skydance.
Analyst Upgrades
At a time like this, it would be easy to think that analysts would take a step back and let the deal work itself out. But that wasn’t the case at Wolfe Research, where analyst Peter Supino bumped up Paramount’s rating from Underperform to Peer Perform. Supino’s reasons make sense; although there are some significant risks facing Paramount right now, if Skydance does step in, that puts Paramount in the hands of “…an owner more likely to exploit Paramount’s intrinsic value…” That, in turn, “…outweighs near-term financial concerns” and makes Paramount a potential powerhouse.
What Is Paramount Global’s Stock Target?
Turning to Wall Street, analysts have a Hold consensus rating on PARA stock based on six Buys, eight Holds, and seven Sells assigned in the past three months, as indicated by the graphic below. After a 43.72% loss in its share price over the past year, the average PARA price target of $13.29 per share implies 10.89% upside potential.
