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Investing.com - UBS maintained its Sell rating and $10.00 price target on Paramount Global (NASDAQ:PARA), significantly below the current trading price of $12.90, as it updated its quarterly estimates to reflect weaker box office performance. According to InvestingPro data, the stock is trading near its 52-week high of $12.92, with technical indicators suggesting overbought conditions.
The investment firm revised its second-quarter revenue forecast to flat growth, down from its previous 2% growth projection, while expecting EBITDA to decline approximately 13% to $756 million. UBS had previously estimated EBITDA of $779 million, compared to consensus expectations of $744 million. This comes as Paramount’s trailing twelve-month EBITDA stands at $2.62 billion, with InvestingPro analysis showing an overall Financial Health score of "FAIR."
UBS projects TV segment EBITDA will decline more than 15%, while the direct-to-consumer segment is expected to generate $115 million in EBITDA, a significant improvement from $26 million a year ago. Free cash flow is forecast at approximately $7 million, similar to the $10 million reported in the second quarter of 2024.
Paramount management had previously indicated it was working toward its full-year outlook of slight EBITDA declines and growing free cash flow, though it acknowledged potential macroeconomic headwinds could impact trends later in the year.
For 2025, UBS forecasts Paramount will generate $2.77 billion in EBITDA, slightly up from its previous estimate of $2.75 billion, but still representing an 11% year-over-year decline.
In other recent news, Paramount Global reported better-than-expected earnings for the first quarter of 2025. The company achieved an earnings per share (EPS) of $0.29, surpassing the forecast of $0.27, and exceeded revenue expectations with $7.19 billion compared to the anticipated $7.12 billion. Paramount’s direct-to-consumer segment showed strong performance, contributing significantly to the company’s revenue growth. Despite a setback with the latest Mission: Impossible film, Guggenheim maintained its Buy rating for Paramount, citing improvements in the TV Media and Direct-to-Consumer segments. The research firm adjusted its forecasts, noting a reduction in Filmed Entertainment revenue but an overall unchanged operating income estimate for the second quarter. Additionally, Paramount Global announced a quarterly cash dividend of $0.05 per share, reflecting its ongoing commitment to returning capital to shareholders. Guggenheim slightly adjusted its long-term financial outlook, citing challenges in the linear marketplace affecting traditional television viewing habits. These developments indicate Paramount’s strategic focus on profitability and growth amidst evolving industry dynamics.
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