Key Takeaways
- Financing Hit: Shares fell 10% on October 1 after $41.4B of Warner Bros. Discovery acquisition notes priced at coupons up to 9.125%.
- Target Gap: The $10 mean target now sits 6% above a $9 close.
- Ratings Split: The 22 analysts split 1 buy, 3 outperforms, 9 holds, 3 underperforms and 6 sells, with the mean target down from $15 in December and the low target at $2.
Shares dropped 10% while the Street’s target stood still. Check every Paramount Skydance analyst call on TIKR for free →
Why Paramount Skydance Stock Fell 10% on Thursday’s Warner Bros. Debt Pricing
Paramount Skydance stock (PSKY) fell 10% on Thursday, October 1, after the company priced $41.4 billion of senior secured notes and an $8.5 billion term loan to fund its Warner Bros. Discovery acquisition. Coupons run from 6.30% on the 2028 notes to 9.125% on the 2036 second-lien notes, and the term loan floats at Term SOFR plus 2.75%.
A federal judge had cleared the deal’s last legal obstacle a day earlier, and the merger now closes October 6. Shares fell anyway. The combined company inherits net debt of nearly $80 billion, and S&P Global had already cut the rating to BB from BB+ on September 24 over higher leverage at close.
The court settlement also narrows the savings path. Paramount must release at least 30 films a year in US theaters for five years and spend $300 million more annually on US production, or face a Miramax sale or $30 million per missing film. The company says neither the decree nor the Writers Guild settlement materially affects its synergy and leverage targets, against more than $6 billion in promised savings.
The merger will close. The 10% drop is the market pricing what closing costs.
Paramount Skydance Stock’s $10 Mean Target Now Sits 6% Above the Price
Paramount Skydance stock closed October 1 at $9, 6% below the Street’s $10 mean target, after sitting 4% above that target the day before. Of the 22 analysts, 9 rate it Hold and 9 rate it Underperform or Sell.
Thursday’s drop left the ratings split and the mean target unchanged. The Street had already cut: the mean target peaked at $15 in December, fell to $13 by March, held there in June and landed at $10 by September, while the high target slid from $20 to $16 and the low target from $7 to $2.
So the stock fell to meet the Street’s number. A 6% cushion between a $2 low and a $16 high shows analysts still disagree on what the combined company earns.
So what is Paramount Skydance Corporation stock actually worth?
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