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Guggenheim cuts price target on Paramount Global on ‘more modest’ streaming sub count, ad trends – The Hollywood Reporter

Guggenheim analyst Michael Morris still rates Paramount Global a “buy,” but again lowered his stock price target and forecast slowing revenue growth for the entertainment group’s streaming subscriber count and ad sales.

The Hollywood studio, which has been gaining investor attention since billionaire investor Warren Buffett bought it to Paramount Global in May, said Morris lowered second-quarter revenue expectations in a July 6 investor note, saying “more modest direct-to-consumer subscriber footfall, ad trending expectations.”

while boosting performance estimates for Tom Cruise’s Paramount Global’s film division Top Gun: Maverick Guggenheim’s forecast of slower growth in launch, streaming subscriber signups and ad sales is a headwind considering the studio is going after budget and premium customers with its free, ad-supported Pluto TV streamer and paid Paramount+ subscription video on-demand platform.

“We lowered our 2Q advertising outlook in the TV media and DTC (direct-to-consumer) segments, reflecting the increasing softness in the market,” Morris said as Guggenheim lowered its Paramount Global price target to $35.00 from $40.00. Other Wall Street observers have similarly pointed to the possibility of shrinking advertising budgets as marketers look to trim spending amid the threat of a recession for the domestic economy.

In mid-February, Guggenheim lowered its price target on then-named ViacomCBS to $40.00 from $53.00, while maintaining a buy rating after rebranding the studio as Paramount Global and signaling that it is moving all-in on streaming.

Morris’ latest estimate for Paramount+ subscriber growth was trimmed to 4.1 million from 4.5 million net additions. “Our revised DTC subscriber momentum… better reflects headwinds from outages in Russia (-3mm net adds) as well as gradual declines in non-Paramount + services,” Guggenheim analysts said of their latest modeling for Paramount Global.

Elsewhere on Wall Street, Bank of America’s Jessica Reif Ehrlich previously listed Paramount as “neutral” as of a June 2 report, while MoffettNathanson analysts had the company at “neutral” with a $30 price target as of May 2.

Shares in the studio, which will release its second-quarter earnings results on Aug. 4, were trading 37 cents, or 1.5 percent lower, at 24.82 on Wednesday morning.

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