2023-05-30 13:21:59 ET
Paramount Global stock ( NASDAQ: PARA ) ( NASDAQ: PARAA ) is pulling another solid move upwards following more analyst positivity on a strategic investment into its key owner.
Paramount stock was up 4.6% at midday after Wolfe Research upgraded the name to Peer Perform, from Underperform -- its second straight session pacing to 4%-plus gains after Thursday's $125M infusion .
The firm had relied on two key assumptions for its Underperform rating, it said: "(1) Paramount would struggle to become sufficiently profitable in streaming to support a higher stock price and (2) Paramount would struggle to sell its largest assets -- CBS and its cable networks -- at prices that would satisfy Shari Redstone."
"So far, so good on our profitability thesis," the firm said.
But then the Redstone family holding company National Amusements announced a $125M margin loan from the merchant bank of Byron Trott, often called Warren Buffett's banker. And the collateral for the loan amounts to a significant minority of NAI's 9.7% equity stake in Paramount, Wolfe notes.
"Given the Redstones' financial situation appears even more pressing, we highly doubt that Shari Redstone's commitment to Paramount's current money-losing strategies would be so great as to lead her towards surrendering those shares," the firm said. "Therefore, we expect her to become increasingly negotiable about the prices at which she would sell assets, both large and small."
On Friday, Loop Capital also upgraded from its Sell rating, saying the stock's downside is no longer clearly greater than upside .
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Paramount rises another 5% as Wolfe becomes latest to upgrade on infusion