The Stock Of Paramount Gets An Upgrade After The Company Shifted From 'Money-Losing Strategies'

Peter Supino, an analyst at Wolfe Research, recently revised his bearish outlook on Paramount Global Inc. following the news of a $125 million preferred equity investment secured by majority shareholder National Amusements. 

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Upgrading Paramount's stock from underperform to peer perform, Supino explained that the new financial arrangement eliminated the negative asymmetry that previously supported a bearish stance. 

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He noted that the collateral for the loan represents a significant portion of National Amusements' 9.7% equity stake in Paramount and questioned whether the CEO's commitment to Paramount's current strategies would be strong enough to prevent her from surrendering those shares. 

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This development, according to Supino, suggests that Redstone, the CEO of National Amusements, may become more open to negotiating asset prices and prioritizing capital preservation in managing Paramount. While Supino did not anticipate significant upside, he believed that the downside for equity investors would be limited due to the focus on capital preservation. 

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Previously, Supino had expressed deep concerns about Paramount's business outlook and had found no fundamental basis for owning the stock. Paramount shares have faced challenges recently, experiencing a 36% decline over the past month amid heightened awareness of the company's financial struggles. 

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In May, Paramount reduced its dividend by nearly 80% as part of its efforts to enhance shareholder value and work towards profitability in streaming.

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