With a market cap of around $7 billion, New York-based Paramount Global (PARA) is a leading media and entertainment company. The company creates and distributes premium content across various platforms, including television, streaming services, and film, with a portfolio featuring iconic brands like CBS, Paramount Pictures, and Nickelodeon.
Shares of the multinational media and entertainment corporation have significantly underperformed the broader market over the past 52 weeks. PARA has declined 2.2% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 41.7%. In 2024, shares of PARA are down 29.2%, compared to SPX’s 22.3% gain on a YTD basis.
Focusing more closely, Paramount Global has also lagged behind the Communication Services Select Sector SPDR ETF Fund’s (XLC) 46.3% gain over the past 52 weeks and a 27% YTD return.
Paramount Global has underperformed due to challenges in its Direct-to-Consumer segment, where increased competition and low visibility on returns hinder growth despite rising subscription revenue. Additionally, declining advertising revenue in the TV Media segment and a weaker film slate have pressured profitability. Moreover, Paramount shares tumbled 7.2% on Aug. 27 following reports that media mogul Edgar Bronfman Jr. withdrew his $6 billion bid to acquire the company. This withdrawal eliminated the potential for a bidding competition with Skydance Media, which could have increased Paramount's final sale price.
For the current fiscal year, ending in December, analysts expect PARA’s EPS to grow 207.7% year-over-year to $1.60. The company's earnings surprise history is promising. It topped the consensus estimates in all of the last four quarters.
Among the 26 analysts covering the stock, the consensus rating is a “Hold.” That’s based on four “Strong Buy” ratings, 11 “Holds,” and 11 “Strong Sells.”
On Sep. 25, Guggenheim analyst Michael Morris lowered Paramount Global's price target to $14 but kept a “Buy” rating. The $500 million in synergies identified by management is included in the 2025 model, with more details on segment impacts expected in upcoming quarters.
The mean price target of $11.81 represents a premium of 12.8% to PARA's current levels. The Street-high price target of $19, implies a potential upside of 81.5% from the current price levels.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
