Analysts remain divided on Paramount Global’s (PARA) outlook following the Federal Communications Commission’s (FCC) approval of its merger with Skydance Media. Loop Capital analyst Alan Gould raised the price target on Paramount from $10 to $11 but maintained a “Sell” rating on the stock. Despite the increase, the revised price target reflects a 15.7% downside potential from current levels. At the same time, TD Cowen analyst Doug Creutz reiterated his “Hold” rating on PARA stock, with a price target of $14, implying 7.3% upside potential.
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Following the FCC’s approval, PARA stock fell 1.6% on Friday, July 25, after touching a fresh 52-week high of $13.59 in early morning trading. Both analysts are encouraged by the approval, citing that the last major hurdle to the deal has been removed. Paramount has stated that it expects the deal to close by August 7, subject to customary closing conditions.
Here’s Why Loop Capital Remains a Sell on PARA
Gould is keeping a close watch on the next important steps in the Paramount-Skydance merger. These include integration, potential further job cuts, efforts to retain key creator Taylor Sheridan beyond his current contract expiring in 2027, and assessing whether the National Football League (NFL) uses a special rule related to changes of ownership in their contracts.
Although the FCC has greenlit the Skydance merger, the stock still faces certain challenges in the integration process going forward. Thus, Gould remains a Sell on Paramount stock.
Why Is TD Cowen a Hold on PARA Stock?
Creutz noted that after the merger, the Skydance CEO David Ellison’s family will gain majority control of Paramount, but their exact plans regarding Paramount’s traditional TV networks remain unclear.
He cited that as part of gaining the FCC’s approval, Ellison agreed to shut down current Diversity, Equity, and Inclusion (DEI) programs, appoint an ombudsman to review bias complaints at CBS, and continue investing in local news.
Creutz believes that with the deal about to close soon, investors will now shift focus to how the new owners plan to enhance the company’s profitability. The analyst expects further details on the combined company’s future strategy during its third-quarter earnings update, due in November. Meanwhile, Skydance faces another imminent challenge of finding a permanent CFO, since the prior CFO Naveen Chopra left abruptly.
Finally, Creutz noted that other media companies, including Comcast (CMCSA) and Warner Bros. Discovery (WBD), have spun off their linear TV assets to improve growth prospects and shareholder value. However, he remains doubtful whether the Ellisons will follow a similar path or keep the company intact.
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 six Sell ratings. The average Paramount Global price target of $12 implies 8% downside potential from current levels. Year-to-date, PARA stock has gained 25.8%.
