What happened
Shares of Paramount Global (PARA 13.40%) were up 3.3% as of 2:54 p.m. ET Tuesday following an upgrade from Bank of America. Its analyst said the company's key profit centers are undervalued, justifying a valuation far greater than the stock's present price.
So what
BofA analyst Jessica Reif Ehrlich called Paramount a "shopping list of attractive assets."
The company isn't known to be looking for a suitor, nor are any potential buyers known to be mulling an acquisition. But Paramount is a top studio, with recent hit films like Top Gun: Maverick and popular television programs such as Yellowstone.
And it has two successful streaming platforms. Paramount+ has nearly 56 million paying customers, while 79 million people now watch its free PlutoTV.
But investors aren't impressed. The stock has been steadily declining since mid-2021, and its current price just above $21 remains within reach of new 52-week lows hit late last year.
Ehrlich thinks this tide could be turning soon. In conjunction with her upgrade from neutral to buy, she's upping her price target from $24 per share to $32, Wall Street's highest.
Now what
BofA's new optimism is still relatively rare. The current consensus on Paramount is slightly below a hold, and shares themselves are already priced a bit over their consensus target. Ehrlich is clearly an outlier here.
But the analyst community may be trying to predict the market's future view of Paramount rather than trying to help investors identify a fair future valuation. Such groupthink can hold a stock down for a while, but eventually, a company's performance is reflected in a stock's price. This particular company is performing well, and -- as Ehrlich says -- it has several reliable revenue-bearing assets under its umbrella.
Interested investors may want to go ahead and take the plunge here, even knowing a perception-related headwind is still blowing.
