Benjamin Swinburne, an analyst from Morgan Stanley, maintained the Sell rating on Paramount Global Class B (PARA – Research Report). The associated price target remains the same with $11.00.
Benjamin Swinburne’s rating is based on several factors that highlight the challenges facing Paramount Global Class B. Despite the positive momentum seen in Paramount+ with a 16% revenue growth in the fourth quarter, the company is grappling with significant pressures in its linear TV segment, which experienced a 7% decline in affiliate revenue. This decline is indicative of the broader secular headwinds affecting the traditional TV industry, which Paramount is particularly exposed to.
Moreover, Swinburne expresses concerns about the long-term profitability of Paramount’s streaming business, despite its recent subscriber growth. The company’s current free cash flow generation is limited, and while content spending is flat year-over-year, it may need to increase to maintain competitiveness. These factors, combined with elevated leverage and a modest free cash flow, contribute to the Sell rating, as they pose risks to the company’s financial health and future growth prospects.
In another report released today, Bernstein also maintained a Sell rating on the stock with a $11.00 price target.