JPMorgan has maintained its underweight rating on shares of Paramount Global (NASDAQ: PARA) with a steady price target of $11.00.
The firm's analysis before the company's earnings report reflects recent trends, keeping the third-quarter Operating Income Before Depreciation and Amortization (OIBDA) unchanged at $655 million.
This steady figure comes despite a reduction in TV Media due to licensing timing, balanced by a lesser drag from Direct-to-Consumer (DTC) operations.
The free cash flow (FCF) for the quarter is also expected to remain at $82 million. Paramount's subscription service, Paramount+, is projected to see an increase of 2.5 million net additions in the third quarter. This boost is attributed to the return of NFL and college football broadcasting, as well as an expansion of a partnership with Canal+ during the quarter.
For the full year, JPMorgan has adjusted the OIBDA forecast for Paramount Global to $3.009 billion, up from the previous estimate of $2.940 billion. This revision is based on improved performance in the company's DTC segment in the second half of the year.
In other recent news, Paramount Global has reported a 43% growth in total company adjusted OIBDA and a 46% increase in Paramount+ revenue.
The company has also declared a quarterly cash dividend of $0.05 per share. Moreover, Paramount Global is moving forward with its merger plans with Skydance Media.
On the analyst front, Seaport Global Securities has maintained a neutral rating for Paramount Global, despite changes in investment group involvement. Loop Capital has also reiterated its sell rating on the company, while Wells Fargo has upgraded its rating from 'Underweight' to 'Equal Weight'.
In other developments, Paramount Global has been executing a significant phase of planned layoffs, aiming for a $500 million reduction in annual costs. This strategy is part of its broader effort to streamline operations.
Additionally, Edgar Bronfman Jr., a media executive, has proposed a $4.3 billion bid to acquire National Amusements, the company with a controlling interest in Paramount Global. This offer challenges Skydance Media's prior agreement to purchase Paramount Global, potentially triggering a $400 million termination fee.
InvestingPro Insights
To complement JPMorgan's analysis of Paramount Global (NASDAQ:PARA), recent data from InvestingPro offers additional context for investors. Despite the challenges highlighted in the article, InvestingPro Tips indicate that Paramount's net income is expected to grow this year, and analysts predict the company will be profitable. This aligns with JPMorgan's increased OIBDA forecast for the full year.
The company's Price to Book ratio of 0.45, as reported by InvestingPro, suggests that Paramount is trading at a low multiple relative to its book value. This could be of interest to value-oriented investors, especially in light of the stock's recent performance, with a year-to-date total return of -27.32%.
Paramount's revenue for the last twelve months stands at $29.27 billion, with a gross profit of $10.04 billion. While these figures provide a snapshot of the company's financial scale, it's worth noting that the revenue growth rate of -2.2% over the same period reflects the challenges in the media industry that Paramount is navigating.
For investors seeking a more comprehensive analysis, InvestingPro offers 8 additional tips on Paramount Global, providing deeper insights into the company's financial health and market position.
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