Benzinga - by Chris Katje, Benzinga Staff Writer.
Paramount Global (NASDAQ:PARA)(NASDAQ:PARAA) will report fourth-quarter financial results after market close Wednesday.
Analysts expect fourth-quarter revenue to hover at around $7.85 billion, according to data from Benzinga Pro. That’s less than the $8.13 billion it reported for the same period in 2022.
Still, the $7.85-billion estimate would mark the highest quarterly total of the financial year for the company. Paramount has beaten revenue estimates in the last two straight quarters.
Analysts expect the company to report a loss of one cent per share, compared to a profit of eight cents per share in the prior year period. The company has beaten earnings per share estimates from analysts in two of the last five quarters.
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What Analysts Are Saying: Pressure on the company's television revenue could continue in 2024 and beyond, Morgan Stanley analyst Benjamin Swinburne said in a recent investor note.
The analyst has an Underweight rating on Paramount and lowered the price target from $11 to $10.
Swinburne said Paramount shares have large exposure to linear television.
"Paramount faces a more acute version of the broader industry challenge — how to improve revenue trends while limiting growth or even reducing content spending?" Swinburne said.
Even with Paramount shares down 20% to 25% year-to-date, the risk/reward remains on the downside, he added. Plus, discussions of a potential merger for Paramount might not help.
"Poor equity performances are a reminder in the face of secular headwinds and technology disruption, the benefits of consolidation can be overwhelmed. Looking ahead, any merger benefits need to be weighed against merger costs,” he said.
- Here are other analyst ratings on Paramount stock:
- Rosenblatt: Sell rating, $12 price target
- MoffettNathanson: Upgrades from Sell to Neutral, $13 price target
- Redburn Atlantic: Downgrades from Neutral to Sell, $11 price target
Apollo Global Mangement, Skydance Media and RedBird Capital are also rumored to be interested in a deal.
The company is also expected to undergo substantial layoffs, initially speculated to be 800, across its various divisions.
Paramount has also been circled with reports of buyout offers from the likes of Skydance Media and Byron Allen. Media mogul Allen bid a reported $14.3 billion for the company.
Paramount will likely not comment on potential acquisition offers or mergers. However, it could share thoughts on whether the sector will see increased consolidation or what its plans are to boost shareholder value.
Investors will be looking for an update on the company's Paramount+ streaming platform, which gained 2.7 million subscribers to hit 63 million in the third quarter.
"We continue to execute our strategy and prioritize prudent investment in streaming while maximizing the earnings of our traditional business," Paramount CEO Bob Bakish said after third-quarter earnings.
Bakish said the company expects to have lower direct-to-consumer losses in 2023 than in 2022.
The fourth quarter ended in December and investors are likely more excited to hear about the company's first-quarter, which included the media rights to Super Bowl LVIII.
The Super Bowl had a record viewership of 123.4 million average viewers and was the most-streamed Super Bowl of all-time. The NFL championship game saw 202.4 million people watch at least a portion of the game. Super Bowl commercials came with a price of $7 million for a 30-second ad, bringing a potential cash windfall to Paramount.
The first quarter will also include Paramount's CBS network welcoming back many hit television shows — which typically air in the fall and during the fourth quarter — that were delayed due to the Hollywood strike.
PARA Price Action: Paramount shares trade at $11.34 versus a 52-week trading range of $10.51 to $24.00. Shares of Paramount are down 49% over the last year and down 27% year-to-date in 2024.
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