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Investing.com - Morgan Stanley has reduced its price target on Paramount Skydance (NASDAQ:PSKY) to $10.00 from $12.00 while maintaining an Underweight rating on the stock. The target sits near the lower end of analyst estimates, which range from $8 to $20, according to InvestingPro data.
The price target adjustment reflects the completion of the merger, including the $15 per share cash tender, and Morgan Stanley’s updated forecast for the media company. Currently trading at $15.85, PSKY has shown strong momentum with a 52.73% gain year-to-date.
The new price target implies that Paramount Skydance shares would trade at approximately 7x enterprise value to forward EBITDA in a year, according to the investment bank.
Morgan Stanley noted that PSKY shares currently trade at 9x, which it considers above peers and elevated relative to expectations for the company’s adjusted operating income before depreciation and amortization.
The firm specifically pointed to expectations for "flattish" adjusted OIBDA, with a 2025-2028 estimated compound annual growth rate that doesn’t support the current valuation.
In other recent news, Paramount Skydance has announced a significant seven-year media rights agreement with TKO Group Holdings to become the exclusive distributor of Ultimate Fighting Championship (UFC) events in the United States starting in 2026. The deal, valued at $7.7 billion, will allow Paramount to stream all 13 UFC numbered events and 30 Fight Nights annually on its Paramount+ platform, with select marquee events also simulcast on CBS. This agreement represents a shift in UFC’s distribution strategy, moving away from the traditional pay-per-view model. Additionally, Paramount is planning a major round of layoffs in early November as part of a $2 billion cost-cutting initiative following its merger with Skydance Media.
In another development, Seaport Global Securities initiated coverage of Paramount Skydance with a Neutral rating, noting that the company had exceeded its previous Sell price target on former PARA shares. This comes as Paramount Skydance shares recently surged, largely due to the announcement of the UFC deal. The agreement is expected to boost Paramount’s content offerings, making it a key player in the sports streaming market.
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