Text size
Shares of
Paramount Global
were rising following an upgrade from BofA Securities, which called the company “a shopping list of attractive assets” in a report Tuesday.
Analyst Jessica Reif Ehrlich lifted her rating on Paramount (ticker: PARA) shares to Buy from Neutral and raised her target for the stock price to $32 from $24. Shares rose 3.6% to $21.51 on Tuesday morning.
“It is our view that PARA has a unique collection of assets that would generate significant buyer interest if ever put up for sale—either in pieces or whole,” Reif Ehrlich wrote, pointing to a February unsolicited offer for Showtime. She also highlighted Nickelodeon, Paramount Studios, and CBS Networks as assets that “could also be in high demand given their strategic value.”
She sees two possible outcomes for the company. The first is that the company will be successful with Paramount+, its direct-to-consumer streaming service, boosting earnings growth in 2024 and after.
A second possibility is that the company has difficulty scaling up its streaming business in a profitable way. This “could lead the company to sell—in our view likely at a significant premium to current market levels,” Reif Ehrlich said.
Shares of Paramount have gained more than 26% so far this year, but it posted disappointing numbers for the fourth quarter in February. Both earnings and revenue were lower than expected as the company grappled with a decline in advertising.
Although this year appears to mark an “earnings trough,” caused by a variety of factors, the company has levers to push, Reif Ehrlich said. The merger of Paramount+ with Showtime, disclosed in January, is expected to bring in millions in savings over time, she said, arguing that the company has room to cut costs to maintain its profitability.
Write to Emily Dattilo at emily.dattilo@dowjones.com