Wall Street analysts remained unimpressed after Paramount Skydance reported the combined company’s first disappointing third-quarter earnings report. Paramount reported a combined pre-merger and post-merger loss of 12 cents per share last quarter. Analysts polled by LSEG had expected earnings of 38 cents per share. Sales of $6.7 billion also fell short of expectations of $6.97 billion. However, the company’s stock was trading 10% higher on Tuesday. Traders appear to be reacting to Paramount’s plans to further cut costs and lay off additional employees. At the same time, the company announced that it will raise prices for its streaming services next year. PSKY 5D Mountain PSKY 5D Chart Still, analysts don’t seem satisfied, with most maintaining a bearish to neutral stance on the company as they see a difficult road ahead for the company. According to LSEG, only two analysts covering the company rate it a “buy.” The majority are in hold status, two are selling, and six are underperforming. Here’s what some of Wall Street’s biggest shops have to say in response to their earnings reports: Barclays: Underperform rating, $8 price target The bank’s price target suggests about a 48% downside from Paramount’s Monday closing price of $15.25. “Management seems focused on fundamentally rebuilding the machine to improve execution, which could be a real long-term value creation opportunity, but it’s not linear in terms of P&L and cash flow. For the time being, the focus of the valuation will remain on changes to the asset portfolio. A potential deal (with Warner Bros. Discovery) would include P.S. We believe there is likely to be a significant cash component that cannot be supported by KY’s existing balance sheet. These factors would therefore imply the possibility of further capital injections.The valuation framework for the stock is likely to remain fluid until some resolution regarding the company’s actions is found.”Morgan Stanley: Underweight, $10. Morgan Stanley’s forecast represents a downside of about 34%. “Q3 results and guidance take a back seat to the new management’s long-term ambitions and continued unconfirmed market reports regarding the potential acquisition of WBD. The new team has clear plans but faces the same issues of streaming scalability and linear headwinds weighing on the sector.” UBS: Sell, UBS target of $12 requires 21% downside going forward. “We continue to value the company based on 7x EBITDA. Positioned at the high end of its peer group, including WBD (closest peer in terms of asset mix), (Fox Corporation) 6.3x, (AMC Networks) 5.0x, with approximately 7x EBITDA prior to PARA bid, and EBITDA accretion from studio ownership and near-term synergies. We think this is fair given the /EBITDA growth.Even if the issue is resolved, the multiple will depend on how quickly the company can expand its streaming business and overcome the impact of legacy assets.”Bank of America: Underperform, $13. Analyst Jessica Lief Ehrlich’s estimate was raised from $11, a 15% premium over Paramount’s Monday closing price. “On a consolidated basis, Streaming’s profitability exceeded our expectations (not fully comparable to our expectations due to reporting changes), but performance was broadly mixed.More importantly, the company’s 2026 “We have provided guidance for 2020, with sales of $30 billion and adjusted operating income before depreciation and amortization of $3.5 billion (above our forecast of $3.1 billion), primarily due to increased run-rate synergies.” (Approximately $2.5 billion by the end of 2026, $3 billion total) In any case, it’s clear that PSKY has a very strong management team, and estimates will likely be revised upwards after the results, but there are still many unknowns about the strategic initiatives the company has undertaken, and as evidenced by previous large-scale mergers, restructuring often takes years to implement. ” JPMorgan: Underweight, $14 Analyst David Karnofsky’s price target was about 8% below Paramount’s Monday closing price. “While we are encouraged by PSKY’s vision, a significant amount of execution remains across direct-to-consumer and filmed entertainment, and the benefits may not be visible until late 2026. We look forward to learning more, but remain underweight and wary of short-term outflows and still long-term risks in TV media.” Citi: Neutral, $17 Citi’s target equates to 11% upside. “Paramount reported lower-than-expected revenue and EPS, but adjusted OIBDA that beat street estimates. The company also provided guidance for 2026, with revenue lower than expected but higher than adjusted operating income before depreciation and amortization, as cost synergies were better than expected. So I wouldn’t be surprised if the stock rises… given the beat.” Wells Fargo: Equal Weight, $18 Bank’s price target is 18% suggests an increase in “PSKY management provided a thoughtful strategy to transform the company. The savings were significant and most were reallocated to content/technology. The evolution of P+ will be the best indicator of success. We increase PT to $18 with higher expectations, which also includes WBD pro forma.”
