Guggenheim Raises Target Price on Paramount Skydance (PSKY) to $14, After Warner Brothers Acquisition Announcement

Paramount Skydance Corporation (NASDAQ:PSKY) is one of the 15 Most Undervalued NASDAQ Stocks to Buy According to Wall Street Analyst.

Guggenheim, on March 2, increased its target price on Paramount Skydance by 27.3% to $14 (from $11) and retained the firm’s Neutral call on the stock. This price increase comes on the heels of Paramount’s conference call on March 2, during which it discussed its acquisition of Warner Brothers Discovery (WBD) and presented a pro forma outlook for the consolidated company.

Photo by Memento Media on Unsplash

In the transaction, PSKY will acquire 100% of WBD in an all-cash transaction at $31.00 per share, valuing the deal at $81 billion. The deal will be funded through a mix of new equity and debt. $47 billion in equity will be infused by the Ellison family and RedBird, at a valuation of $16.02 per PSKY share. The debt will be in the form of a $54 billion fully committed bridge loan from a consortium of lenders (Bank of America, Citi, and Apollo), which will be used to fund the rest of the acquisition ($39 billion) and refinance WBD’s existing bridge facility ($15 billion).

The combined entity is estimated to generate $69 billion in revenue in 2026, yielding an adjusted EBITDA of $18 billion (which includes $6 billion in estimated synergies). In the medium term (or until 2030), management expects mid-single-digit revenue growth, mid-20% EBITDA margin, and ~50% free cash flow conversion.

Paramount Skydance Corporation (NASDAQ: PSKY) is a global media and entertainment company that provides content creation and distribution services. The company is based in New York, New York, and was founded in June 2024.

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