Media giant Paramount Global (PARA) reported better-than-expected earnings in the second quarter of fiscal 2025, although revenues marginally fell short of expectations. Wall Street quickly reviewed the results as Paramount prepares to merge with Skydance Media this week. Notably, management did not hold a question-and-answer session with analysts in light of the merger. The combined company will continue trading on the Nasdaq under the new ticker symbol “PSKY.”
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Paramount’s Direct-to-Consumer (DTC) business was the real highlight, with revenues growing 15% year-over-year to $2.16 billion. Meanwhile, TV Media revenue dropped by 6% to $4.01 billion, and Filmed Entertainment revenue rose 2% to $690 million. PARA stock gained 3.5% on August 1, following the earnings announcement.
Analysts Remain Divided on PARA’s Q2 Results
Following Paramount’s Q2 print on July 31, only one analyst reiterated a “Buy” rating on PARA stock and six analysts maintained a “Hold” rating. Morgan Stanley analyst Benjamin Swinburne was the only analyst to reiterate a Sell on PARA stock but lifted the price target to $12 (from $10), implying 7.8% downside potential. Let’s briefly review some of these analysts’ views on Paramount’s Q2 results.
TD Cowen analyst Doug Creutz reiterated a Hold rating on PARA stock with a price target of $14, implying 7.6% upside potential from current levels. Creutz was encouraged by Paramount’s DTC revenues, which exceeded his estimate of $2.10 billion, and also pushed the company’s total sales of $6.85 billion above his revenue estimate of $6.80 billion. He highlighted the upcoming Skydance merger, noting that two of the three co-CEOs (Chris McCarthy and Brian Robbins) are expected to leave the company shortly after the deal closes. Creutz also expects other senior employees to depart following CFO Naveen Chopra’s resignation in June. He anticipates that Paramount’s new ownership will “outline its plans for the asset in the coming months.”
Benchmark Co. analyst Daniel Kurnos reiterated his Buy rating on PARA stock and maintained the Street-high price target of $16, which implies nearly 23% upside potential. Kurnos noted that the merger marks “the end of an era for Paramount,” with solid Q2 results driven mainly by the DTC segment. He pointed out that PARA did not provide any guidance ahead of the merger, leaving analysts to speculate about the merged entity’s future revenue and profitability. Kurnos modestly raised his 2025 EBITDA (earnings before interest, taxes, depreciation, and amortization) estimate due to the solid start to the year but lowered his 2026 figures. Nonetheless, Kurnos’ estimates remain slightly above consensus on most parameters.
Moreover, Barrington analyst Patrick Sholl also reiterated his Hold rating on PARA without assigning a price target. Sholl also highlighted the DTC unit’s solid quarterly performance, with 77.7 million total subscribers for Paramount+. The analyst noted that the Skydance deal allows shareholders to gain immediate value from some shares. Sholl added that Skydance expects $2 billion in cost savings to boost profits, and current management is already working on reducing costs. Plus, the merger adds new production strengths like animation and gaming, while the capital from the deal will improve the company’s debt position. Sholl believes that growth in Paramount+ users and improved customer retention suggest stronger streaming revenue in the future.
Is PARA Stock a Good Buy?
Based on the varying analyst ratings, PARA stock has a Moderate Sell consensus rating on TipRanks. This is based on two Buys, seven Holds, and seven Sell ratings. The average Paramount Global price target of $11.92 implies 8.4% downside potential from current levels. Year-to-date, PARA stock has gained 25.5%.
