Street Calls of the Week
Investing.com - Wells Fargo upgraded Paramount Group (NYSE:PGRE) from Underweight to Equal Weight and raised its price target to $6.60 from $4.20 on Thursday. The stock, which has seen a significant 60% surge over the past six months according to InvestingPro data, recently experienced a sharp 9.4% decline in the past week.
The upgrade follows Wednesday’s announcement that Rithm Capital agreed to acquire Paramount Group for $1.6 billion, or $6.60 per share, representing a 10.7% discount to Paramount’s closing price of $7.39 on September 16. The deal values Paramount at its current market capitalization of approximately $1.56 billion.
Wells Fargo analyst Blaine Heck noted the firm had been "somewhat skeptical that a deal to buy PGRE would come to fruition at all given the Board’s resistance to prior take-out attempts," but was "not surprised the deal is slated to be executed at a discount to yesterday’s closing price."
The acquisition is expected to be funded through a combination of excess cash from Paramount Group, cash and liquidity from Rithm Capital’s balance sheet, and funding from co-investors.
Management anticipates the transaction will close in late fourth quarter 2025, subject to approval.
In other recent news, Paramount Group, Inc. reported its second-quarter 2025 earnings, revealing a revenue beat with actual revenue of $177.05 million, surpassing forecasts of $170.3 million. However, the company missed earnings per share (EPS) expectations, reporting -$0.09 compared to the anticipated -$0.05. Additionally, Paramount Group has entered into a definitive agreement to be acquired by Rithm Capital Corp. for approximately $1.6 billion in cash. Under the terms of the agreement, Rithm will pay $6.60 per fully diluted share for all outstanding Paramount common stock. This acquisition has been approved by the boards of both companies and is expected to close in late Q4 2025, subject to stockholder approval and customary conditions. Previously, Paramount Group attracted interest from several major players in the commercial real estate sector, including SL Green and Blackstone. The sale process saw Paramount advance to the second round of bidding, with Rithm Capital ultimately securing the acquisition deal.
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