Paramount Global (PARA) was lifted to Equal-Weight from Underweight at Wells Fargo on Wednesday, with analysts raising the stock price target to $18 from $15 per share.

Analysts said the firm is upgrading the stock as they see an increased probability of a 2024 M&A event “that brings in a value-unlocking strategy/mgmt.”

“Deadline, NYT, Puck News, and the FT have reported potential interest in NAI and PARA’s controlling A shares, incl. by Skydance/Redbird and other
parties. The companies have not commented,” explained analysts. “We continue to believe that NAI might like to sell a controlling stake to a content operator that would protect the significance of Paramount Studios. i.e. willing buyer(s), willing seller.”

“We think a future owner/operator could divest non-content assets and shutdown Paramount+. We think this would satisfy PARA’s IG req’t for CoC. Pre-tax, Pluto could be sold for $1.3bn, CBS Network $5bn and the O&Os $4bn, and for all divested assets, we est. ~$10bn post-tax proceeds,” they added.

Wells Fargo’s pro-forma PARA valuation on a divestiture and content strategy is now $23 a share.