Analysts Assess Paramount’s First Earnings Report Under David Ellison
Wall Street has responded positively to Paramount’s third-quarter earnings report, marking the company’s first results under David Ellison’s leadership and Skydance Media’s ownership. Ellison emphasized the prioritization of direct-to-consumer (DTC) services and the enhancement of creative output in a letter to shareholders. The company is also undergoing a comprehensive strategic review focusing on potential divestitures of non-core assets, which may include the notable television network Telefe in Argentina.
Paramount’s Stock Performance
In pre-market trading, Paramount’s stock experienced an increase of 5%, reaching $16.01 as of 8:25 a.m. ET, demonstrating investor confidence in the new leadership’s direction.
Financial Highlights and Analyst Insights
- Analyst: Kenneth Leon (CFRA Research)
- Price Target: $19
- Stock Rating: Buy
- Key Takeaway: The DTC segment saw a 17% revenue increase year-over-year, totaling $2.2 billion. Paramount+ contributed significantly, growing 24% to $1.8 billion and gaining 79.1 million global subscribers, marking a 10% increase.
- Profitability: DTC achieved adjusted operating income before depreciation and amortization of $235 million.
- Analyst: Robert Fishman (MoffettNathanson)
- Price Target: $16
- Stock Rating: Neutral
- Key Takeaway: Fishman raised concerns about identifying additional cost savings and the financial demands of competing with major players like Netflix and Disney.
- Analyst: Daniel Kurnos (Benchmark)
- Price Target: $19
- Stock Rating: Buy
- Key Takeaway: The new CEO presents optimistic projections for DTC profitability and plans significant investments in original content.
- Analyst: Michael Morris (Guggenheim)
- Price Target: Not Applicable
- Stock Rating: Neutral
- Key Takeaway: Concerns persist regarding content production efficiency and the overall trajectory of partnership strategies.
- Analyst: Jessica Reif Ehrlich (Bank of America)
- Price Target: $13
- Stock Rating: Underperform
- Key Takeaway: While the potential for growth is acknowledged, Ehrlich pointed out the necessity for considerable investment and strategic patience.
Future Outlook for Paramount
Analysts express mixed feelings on Paramount’s long-term strategy. While some view the company’s advancements as promising, others remain cautious about the challenges it faces in a competitive environment. The focus remains on the streaming business, projected to reach $30 billion in revenue by 2026, with adjusted OIBDA estimates at $3.5 billion.
As Paramount moves forward under David Ellison, its intent to streamline operations and enhance creative output may shape its future trajectory in the competitive media landscape.
