Paramount Global stock offers plenty of upside if the media company were to sell some or all of its business, according to analysts at Bank of America.
The firm upgraded its rating for the stock to ‘Buy’ from ‘Neutral’ and raised its price target to $32 from $24.
"It is our view that PARA has a unique collection of assets that would generate significant buyer interest if ever put up for sale, either in pieces or whole,” the analyst wrote Tuesday.
Paramount shares closed Tuesday 3% higher at $21.41. The stock had slid back a bit Wednesday, losing 1.1% at $21.17.
Specifically, BofA pointed to recent reports about a potential sale of the company's BET Media Group, which includes cable channels BET and VH1, after producer Tyler Perry and media mogul Byron Allen reportedly expressed interest in purchasing a majority stake.
Earlier this year, Paramount also turned down an offer of more than $3 billion to buy Showtime from former executive David Nevins, according to The Wall Street Journal.
"We believe these press reports validate our thesis," the analyst said. "We think other assets such as Nickelodeon, Paramount Studios and CBS Networks could also be in high demand given their strategic value, and it is not difficult for us to contemplate a scenario where the sum of the various assets is worth more than PARA's consolidated [enterprise value]."
Paramount CFO Naveen Chopra declined to address the sales speculation specifically in an interview with Yahoo Finance Live earlier in March but said the company is always looking for ways to create value for shareholders.
"To the extent that there are ways to do that — by buying assets, by selling assets, by restructuring assets — we look at all of those very carefully," Chopra said.
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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