Guggenheim cuts price target on Paramount Global on “More Modest” subtitle for streaming, advertising trends – The Hollywood Reporter
Guggenheim analyst Michael Morris still rates Paramount Global as a “buy”, but has also lowered its share price target, again, and forecasts declining revenue growth for the entertainment conglomerate’s number of streaming subscribers and ad sales.
The Hollywood studio, which is getting investor attention after billionaire investor Warren Buffett bought into Paramount Global in May, faces “more modest direct-to-consumer subscriber pace, expectations of advertising trend,” Morris said in a July 6 investor note that trimmed others. income expectations.
While increasing performance estimates for Paramount Global’s film division on Tom Cruises Top Gun: Maverick release, the Guggenheim forecast of slower growth in streaming subscriber registration and advertising sales is a headwind given that the studio pursues 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 prospects for the TV Media and DTC (direct to consumer) segments, reflecting incremental softness in the market,” said Morris as Guggenheim lowered its Paramount Global price target to $ 35.00 from $ 40.00. Other Wall Street monitors have similarly pointed to advertising budgets that are likely to shrink as marketers try to cut costs in the midst of a recession threat to the domestic economy.
In mid-February, Guggenheim lowered the price target on the then ViacomCBS to $ 40.00, from $ 53.00, while also maintaining the purchase rating after the studio was changed to Paramount Global and signaled that 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 pace … reflects better headwinds from the shutdowns in Russia (-3 mm net) 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” from a June 2 report, while MoffettNathanson analysts had the company as “neutral” with a price target of $ 30, as of May 2.
The shares in the studio, which will publish the result for the second quarter on August 4, traded down 37 cents, or 1.5 percent, to 24.82 on Wednesday morning.