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Paramount stock rises on upgrade from Loop Capital

Yahoo Finance Senior Reporter Alexandra Canal discusses a rise in shares of Paramount after an upgrade from Loop Capital.

Video transcript

- Capital, you'll give the stock gaining just about 6%. Yahoo Finance's Alexandra Canal has the story for us. And Ali, you can see it in the reaction and the share price, there is a lot of excitement around this [INAUDIBLE].

ALEXANDRA CANAL: This is rare from Paramount, right. I mean, the stock is up 6% today, on Friday, shares closed up 6% on the heels. Of that upgrade, Loop Capital boosting the stock to hold from sell, also reiterated its price target of $14 a share. Writing in a note, quote, "We no longer believe the downside is that much greater than the upside." Adding that financial pressure surrounding the company is going to force Paramount to find a buyer. So that M&A speculation really driving shares today.

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We also saw late last week that BBT Capital Partners fund a $125 million preferred equity investment in National Amusements, which is the holding company for Paramount, with Shari Redstone at the helm. That investment is going to help National Amusements pay down its debts.

And in a press release, Redstone was very confident about the direction of Paramount. She said that National Amusements has, quote, "conviction in the strategy and execution of this company." And when we think about Paramount, it's long been rumored as a potential acquisition, especially considering the small size of the company relative to competitors like Netflix and Disney.

We've heard from Bob Bakish, the CEO of the company, who said he expects more media M&A down the line. There's also been several reports that Paramount is exploring at least the sale of some of its company, with BET long rumored as a potential acquisition target. So that's something that investors, I think, want down the line. Right now, Redstone's rhetoric is saying, OK, we're not wanting to sell at least right now, but something to keep an eye on.

- What about the flip side of that? Have we seen any appetite out there from the street, from maybe some of its competitors that they would be interested in either some or maybe parts of Paramount Global, just in terms of the fact that they aren't able to win with their streaming efforts alone?

ALEXANDRA CANAL: Yeah, and look. I think Paramount has really good content, right. "Yellowstone, "Top Gun Maverick," they own a lot of really strong intellectual property. So if you're a streaming giant like Apple, for example, and you want to boost up your library, this could be a potential acquisition target for you.

I think the problem that's going to plague Paramount is the CBS networks, right. No one really wants to own cable right now. And also, you have a very difficult macroeconomic environment. You want to make sure that you're selling it for the right price.

But I do think, in 2024 or 2025, especially when this M&A really starts to pick up, this is one company to watch because they just have a lot of valuable assets. And I think they're going to be able to get a significant amount for them, it just depends what and at what price.

- Yeah, exactly. Right, shares up just about 6% today. Alexandra Canal, thanks.