Paramount Price Target Cut By Analyst Forecast of “More Modest” Streaming, Ad Growth
Guggenheim analyst Michael Morris still rates Paramount Global a “Buy,” but has also lowered his stock price target, again, and forecasts slowing revenue growth for the entertainment conglomerate’s streaming subscriber count and advertising sales.
The Hollywood studio, receiving investor attention after billionaire investor Warren Buffett bought into Paramount Global in May, faces “more modest direct-to-consumer subscriber pacing, advertising trend expectations,” Morris said in a July 6 investor note that trimmed second revenue expectations.
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While raising performance estimates for Paramount Global’s film division on Tom Cruise’s Top Gun: Maverick release, the Guggenheim forecast of slower growth in signing up streaming subscribers and advertising sales is a headwind considering the studio is pursuing both budget and premium customers with its free, ad-supported Pluto TV streamer and paid Paramount+ subscription video on-demand platform.
“We have lowered our 2Q advertising outlook at the TV Media and DTC (direct-to-consumer) segments, reflecting incremental softness in the marketplace,” Morris stated as Guggenheim lowered its Paramount Global price target to $35.00 from $40.00. Other Wall Street watchers have similarly pointed to ad budgets likely to shrink as marketers look to trim costs amid a recession threat to the domestic economy.
In mid-February, Guggenheim lowered the price target on then named ViacomCBS to $40.00, from $53.00, while also maintaining buy rating after the studio rebranded as Paramount Global and signaled it was going all-in on streaming.
The latest estimate from Morris for Paramount+ subscriber growth was trimmed to 4.1 million, from 4.5 million net additions. “Our revised DTC subscriber pacing… better reflects headwinds from the shutdowns in Russia (-3mm net adds) as well as a gradual decline in non-Paramount+ services,” the Guggenheim analyst said of his latest modeling for Paramount Global.
Elsewhere on Wall Street, Bank of America’s Jessica Reif Ehrlich previously listed Paramount as “Neutral” as of a June 2 report, while MoffettNathanson analysts had the company as “Neutral” with a price target of $30, as of May 2.
Shares in the studio, which will release its second quarter earnings results on Aug. 4, were trading down 37 cents, or 1.5 percent, at 24.82 on Wednesday morning.
