Barrington analyst Patrick Sholl has reiterated their neutral stance on PARA stock, giving a Hold rating today.
Patrick Sholl has given his Hold rating due to a combination of factors impacting Paramount Global Class B. The company has shown positive trends in its streaming segment, with subscriber growth driven by sports and primetime programming. This has led to increased advertising revenues and engagement, although the growth in average revenue per user has been moderated by pricing strategies. Despite these gains, the linear networks segment is facing challenges, with declining affiliate fee revenues and a significant year-over-year drop in operating income before depreciation and amortization (OIBDA). The company is taking steps to address these issues, such as reducing headcount and leveraging political revenues to support advertising trends.
In the studio operations, while revenues have exceeded expectations due to a strong release slate, the associated costs have impacted profitability. Paramount’s strategy to leverage its franchises is supporting subscriber growth in its direct-to-consumer segment. The company’s financial position is improving, with reduced leverage and strong free cash flow generation. However, the anticipated impact of affiliate renewals and the comparison with the Super Bowl in 2024 may weigh on profitability. Overall, while there are positive developments, the challenges in certain segments and the need for continued cost management justify the Hold rating.
In another report released today, TD Cowen also reiterated a Hold rating on the stock with a $14.00 price target.