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Bank of America expert Jessica Reif Ehrlich, in her report “Hard to buy if not for sale,” slashed her price target on the shares from $32 to $9.
By Georg Szalai
Global Business Editor
Bank of America analyst Jessica Reif Ehrlich has been bullish on the stock of Paramount Global, driven by her belief that the entertainment giant could fetch attractive price tags for key assets. But on Monday, she cut her stock rating on the Hollywood company all the way from “buy” to “underperform,” while decimating her price target on the shares from $32 to $9 in a report entitled “Hard to buy if not for sale.”
Paramount shares declined in early Monday trading despite gains in the broader market, hitting $13.22, down 3.9 percent, at 9:35 a.m. ET. For the year, the stock is down more than 20 percent.
“Our prior bullish thesis and valuation methodology was predicated on Paramount’s inherent asset value in a potential sale,” Reif Ehrlich explained in her report. “Despite receiving credible bids for several different assets (e.g. Showtime and BET), it does not appear any significant asset sales are on the horizon. Given the secular challenges in the traditional media ecosystem, we were surprised to see Paramount walk away from these potential buyers for various assets.”
The analyst added this warning: “Our concern is the longer it takes to execute potential asset sales, the less value they could ultimately garner.”
In her earnings preview report, the Wall Street veteran had emphasized: “Paramount has a unique collection of assets that would generate significant interest if put up for sale.”
Reif Ehrlich’s downgrade came after Paramount, led by CEO Bob Bakish, reported better-than-expected third-quarter earnings and a narrowed streaming loss last week. About her new price target of $9, she highlighted that it was seven times her 2024 estimates for Paramount’s operating income before depreciation and amortization (OIBDA), “which represents a modest premium to the current trading levels of both Warner Bros. Discovery/Fox and a discount to Disney.”
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