Renowned research firm UBS continues to maintain a “Sell” rating on Paramount Global (PARA) stock, despite signs that the media giant’s headwinds are gradually fading. In a recent research note, analyst John Hodulik reiterated his Sell rating on PARA and kept his price target at $10, which implies 22.1% downside potential from current levels.
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The analyst adjusted Paramount’s model estimates to reflect the disappointing box office performance of the latest Mission: Impossible release and consumers’ shifting preferences from traditional TV to online streaming. Nonetheless, PARA stock has gained 24.4% so far this year.
Hodulik is a top analyst on TipRanks, ranking #629 out of the 9,695 analysts covered. He boasts a 68% success rate and an average return per rating of 12.30%. Interestingly, his track record on Paramount recommendations is even better, with an 85% success rate and an average return per rating of 21.62%. It is worth noting that Hodulik has consistently maintained a Sell rating on PARA stock over the past five years.
Paramount’s Hurdles Seem to Be Fading Away
On July 1, Paramount settled the long-standing lawsuit filed by President Trump against CBS News for $16 million. The lawsuit alleged that CBS News deceptively edited the “60 Minutes” interview with presidential candidate Kamala Harris during last year’s campaign.
The settlement of this case also paves the way for approval of the long-pending merger with Skydance Media. The Federal Communications Commission (FCC) is currently reviewing the potential merger and is also examining how Paramount handled the interview edit and the related complaint. With the lawsuit now resolved, Chairman Brendan Carr, who was appointed by the Trump administration, could be more likely to greenlight the merger.
Hodulik Lowers Model Estimates for Paramount
For Q2FY25, Hodulik now projects a flat revenue growth rate, down from the 2% increase previously expected. Additionally, adjusted OIBDA (operating income before depreciation and amortization) is expected to decline 13% year-over-year to $756 million, compared to the prior projection of $779 million. For reference, the consensus for OIBDA is $744 million.
Hodulik forecasts that Paramount’s TV segment adjusted OIBDA will decline by more than 15% compared to Q2FY24, while the Direct-to-Consumer (DTC) segment is expected to report a remarkable 342% year-over-year jump to $115 million.
Paramount continues to struggle with declining traditional TV revenues, digital advertising pressures, and ongoing streaming losses, even as it seeks improved performance in its DTC segment and navigates industry-wide shifts and macroeconomic uncertainties.
Is PARA Stock a Buy, Hold, or Sell?
Analysts remain cautious about Paramount’s long-term stock outlook. On TipRanks, PARA stock has a Hold consensus rating based on two Buys, seven Holds, and five Sell ratings. Also, the average Paramount Global price target of $12.09 implies 6.3% downside potential from current levels.
