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Investing.com - UBS raised its price target on Paramount Skydance (NASDAQ:PSKY) to $12.00 from $10.00 on Wednesday, while maintaining a Sell rating on the stock. According to InvestingPro data, the stock has shown remarkable strength with a 79% return over the past year, despite trading at a notably low Price/Book ratio of 0.44.
The price target adjustment reflects the closing of the Skydance deal, though UBS expressed concerns about the company’s heavy content investments and challenging industry landscape. These investments include a $1 billion-plus annual rights deal for UFC, new agreements with South Park creators, and output deals with the Duffer Brothers and Will Smith. InvestingPro analysis shows the company maintains strong liquidity with a current ratio of 1.39, providing some cushion for these substantial investments.
UBS noted that Paramount Skydance is simplifying its streaming offerings while cutting spending for legacy businesses, with a previous target of $2 billion in cost savings, representing about 7% of combined operating expenses. The firm also acknowledged reports suggesting the company is exploring an acquisition of Warner Bros. Discovery (WBD).
Despite these developments, UBS highlighted limited visibility and increasingly difficult industry conditions, with over 90% of current revenues coming from legacy Paramount businesses that have high exposure to linear TV and general entertainment.
The firm projects $3.13 billion of EBITDA in 2026 and $3.40 billion in 2027, significantly below management’s previous guidance of $4.1 billion and $4.5 billion provided in July 2024, with expectations of approximately $400 million in free cash flow in 2026 and $765 million in 2027. Current EBITDA stands at $2.57 billion, with analysts forecasting profitability this year despite recent challenges. For deeper insights into PSKY’s valuation and financial health metrics, explore the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Paramount Skydance is set to acquire the startup news outlet, the Free Press, and plans to appoint its founder, Bari Weiss, as the editor-in-chief of CBS News. This move will see Weiss guiding the editorial direction of major programs like 60 Minutes. Additionally, Paramount has secured a long-term media rights agreement for Zuffa Boxing, making Paramount+ the exclusive streaming platform for these events across the U.S., Canada, and Latin America starting in January 2026.
In a strategic personnel move, Paramount has appointed Makan Delrahim, a former DOJ antitrust chief, as its Chief Legal Officer. Meanwhile, Paramount Skydance is reportedly preparing a bid for Warner Bros. Discovery that could range between $22 and $24 per share, though this remains speculative. Raymond James has raised its price target for Warner Brothers Discovery to $22, maintaining an Outperform rating, amid speculation about potential acquisition scenarios involving Paramount Skydance. These developments highlight a period of significant activity and strategic positioning for Paramount Skydance.
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