Paramount Global Eyes Profitability, Analysts Assess Subscriber Surge And Cost Savings

Wall Street analysts rerated Paramount Global PARA after the company reported its fourth-quarter report on Wednesday.

Paramount reported $7.98 billion in revenue, falling short of the expected $8.07 billion. The company added 5.6 million subscribers in the fourth quarter, marking its best quarter in two years.

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Guggenheim analyst Michael Morris reiterated Paramount Global with a Buy and a $14 price target.

Needham analyst Laura Martin maintained Paramount Global with a Hold.

Guggenheim: Fourth-quarter revenue and adjusted OIBDA fell below Morris’ and consensus forecasts, while Paramount+ subscriber growth outpaced estimates.

Management cited meaningful progress toward long-term goals, mainly focused on content performance and a path to domestic Direct-to-Consumer (“DTC”) profitability.

Adjusted OIBDA was hit by $90 million in compensation-related expenses, which he does not expect to recur. Incremental positives included Paramount+ seeing record engagement per user (up >20%), achieving its $500 million in run-rate savings target in 2024, and full-year free cash flow of $489 million versus consensus of $274 million.

However, Morris also highlighted weaker-than-forecasted ad trends, further pressure on core network affiliate fees and another quarter of Film segment losses. Morris lowered his first-quarter OIBDA to $618 million (versus $802 million prior). However, his full-year forecast is now $2.86 billion (versus $3.0 billion prior). Skydance transactions remain on track to close in the first half of 2025.

Needham: Paramount reported fourth-quarter 2024 revenue of $8 billion (up 5%, 3% below his estimate), operating income of $129 million (down 68%, 75% below his estimate), adjusted OIBDA of $406 million (down 22%, 35% below his estimate), and an adjusted EPS loss of $0.11 (down from $0.04 in fourth-quarter 2023 and well below his estimate of +$0.24). Paramount stated that its sale to Skydance will likely close in the first half of 2025.

Martin highlighted the lack of financial visibility, shrinking profitability and ROICs. He expects fiscal 2025 comps to have an impact from Paramount’s Superbowl and Political ad revenue in fiscal 2024.

Price Action: PARA stock is down 0.67% $11.15 at last check Thursday.

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