In case their accounts weren’t already down enough, investors of Paramount Global (NASDAQ:PARA) are having yet another difficult day. PARA stock is down due to an unapologetic downgrade and price-target slashing at the hands of Wells Fargo analysts. It seems they’re concerned that Paramount Global might not successfully navigate the broader transition away from cable and toward streaming.
Will Paramount survive the cord-cutting revolution? It’s a question that some of today’s financial traders are probably asking themselves. On that topic, Wells Fargo analysts cautioned that risks pertaining to the transition toward streaming will only “continue to worsen in the years ahead.”
Furthermore, the analysts anticipate that streaming will “only be meaningfully profitable for the biggest scale players.” Presumably, the Wells Fargo analysts had Paramount in mind when they made that dire prediction.
On top of all that, the analysts expect that Paramount is “likely to have negative revisions and tough decisions.” These decisions could include “reconsidering sports rights or shifting strategy,” they added.
What’s Happening With PARA Stock?
PARA stock slumped 5% this morning, after already losing much of its value throughout 2022. Paramount now has a rock-bottom price-to-earnings ratio and the company still pays a hefty dividend. Yet, these factors aren’t swaying today’s anxious traders.
Most likely, investors aren’t only reacting to the Wells Fargo analysts’ commentary. Rather, they’re also probably responding to a harsh downgrade and price-target reduction.
Specifically, the Wells Fargo analysts downgraded PARA stock to “underweight” after already having downgraded it to “equal weight” not long ago. Additionally, the analysts slashed their price target on Paramount shares from $19 to $13.
That’s a substantial target cut, and it implies that Paramount’s investors may experience more pain. Now, it’s up to the company to demonstrate that it can adapt to the streaming movement and deliver value to the downtrodden shareholders.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
