Needham top analyst Laura Martin reiterated her “Hold” rating on Paramount Global (PARA) stock and recommended that “investors move to the sidelines until PARA’s ownership, leadership structure, strategic vision, and execution road map are clarified.” Martin’s warning comes as investors and analysts anticipate Paramount’s $8.4 billion merger with Skydance Media. Paramount has stated that it expects the transaction to close on August 7.
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Paramount reported mixed second-quarter results on July 31, with adjusted earnings beating expectations but revenues falling short of forecasts. PARA stock has been steadily declining since the results, losing 11.5% in the past five trading sessions.
Needham Remains a Hold on PARA Stock
Notably, Paramount reported its last quarterly performance as a standalone business ahead of the merger. Martin highlighted that the company did not take any questions or provide updated financial guidance. After the merger closes, the combined company will continue to trade on the Nasdaq under a new ticker symbol, “PSKY.”
A lot of uncertainty remains about the combined company’s ownership and leadership structure until further details are provided. Skydance is expected to purchase the Redstone family’s majority stake in Paramount. Its CEO David Ellison will lead the combined entity. However, Martin urges investors to wait for more clarity on the company’s strategic vision and execution plan.
She also fears that PARA stock could undergo short-term price disruptions as event-based (merger-related) holders churn their shares. She is also concerned about Paramount’s declining revenue growth. Martin believes that Paramount’s scale is “too small” to compete effectively in the media and entertainment sectors.
Although Paramount did not issue any guidance for the future, Martin made minor adjustments to her model estimates based on the Q2 results. For fiscal year 2025, she now projects revenue of $28.2 billion, down 3% year-over-year but 1% above her prior estimate. Moreover, adjusted earnings are projected to be 10% above the prior estimate at $1.35 per share, reflecting a 13% year-over-year decline. For FY26, she maintained her earlier estimates of $28.2 billion in revenue and $1.37 per share in adjusted earnings.
Is PARA Stock a Buy, Hold, or Sell?
On TipRanks, PARA stock has a Moderate Sell consensus rating based on two Buys, seven Holds, and seven Sell ratings. The average Paramount Global price target of $11.92 implies 1.5% upside potential from current levels. Year-to-date, PARA stock has gained 13.3%.
