American multinational mass media and entertainment giant, Paramount Global (NASDAQ: PARA) have seen a downgrade in its PARA stock rating. The companies in this sector, including Warner Bros Discovery Inc. (NASDAQ: WBD) are going through advertising pressures. The slashing in stock ratings came in the wake of the advertising issue.
Wolfe Research took the bearish approach for Paramount stock. The firm downgraded PARA stock from Peer Perform to Underperform and put the price target of $14.
The decline in stock rating came as slight negative sentiment for Paramount stock as a result it took a hit in the trading session of Friday.
Peter Supino, an analyst at Wolfe Research wrote in a note for clients that “Advertising revenue being almost pure profit, faster declines savage profitability.”
The analyst stated that recent checks on industry found advertisers’ spending prior to the new TV season becomes likely to stay behind expectations. In the aftermath, this would see the rollback in pricing for the first time in a decade. .
“While Paramount has abundant streaming inventory in Paramount+ & Pluto to offset linear losses, we argue that 1) the overall streaming supply is outpacing demand and 2) high margin linear deterioration just simply means more for a company playing catch up in the streaming wars,” the note said.
Paramount stock price had witnessed a disappointing gap following the previous earnings report. The stock price dwindled and ended up forming a gap phase from $21.8 to $18.9. Price point of $22 is the next hurdle for PARA stock which would be tough given the phase is just over the head.
The strong sell-off of Paramount shares in the wake of weak earnings reported for Q1 2023, brought PARA stock price to 52-wk low of $13.7 in June. Since then the price is consolidating and moving ahead unenthusiastic. Prior to entering the gap phase, Paramount stock would need to recover from the existing phase.
Given the slow movement in stock price, any significant move is unlikely until the earnings. Gap between the 50- and 200-day EMA is also broadening towards the downside. The upcoming earnings for Q2 2023 scheduled to release by August are expected to recover the previous quarter’s gaps, a goal that seems uneasy to achieve at the moment.
At the time of sell-off in May, the selling volume of Paramount stock saw a significant surge. Until then, the average volume remained steady, supporting the assumption of the improbability of strong movement ahead.
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Source: https://www.thecoinrepublic.com/2023/07/11/paramount-stock-price-has-a-long-way-ahead-to-pick-pace-again/