TLDR
- Morgan Stanley upgraded PSKY from Underweight to Overweight, sending the stock up 8.5% to $11.12
- Price target raised to $14 from $11, representing ~26% upside
- The upgrade is tied to Paramount’s $81 billion acquisition of Warner Bros. Discovery
- The deal is expected to generate over $6 billion in cost savings, partly through AI
- PSKY is still down ~17% year-to-date and trades 43.6% below its 52-week high
Paramount Skydance (PSKY) jumped 8.5% to $11.12 on Friday after Morgan Stanley issued a double upgrade on the stock, moving it from Underweight to Overweight.
Paramount Skydance Corporation Class B Common Stock, PSKY
The bank also raised its price target to $14 from $11 — about 26% above where the stock was trading before the call.
Morgan Stanley analyst Sean Duffy called it the firm’s “riskiest and most out-of-consensus call.” The upgrade leans into investor pessimism, arguing the stock’s losses this year have created a buying opportunity.
PSKY is still down around 17% in 2026, and trades 43.6% below its 52-week high of $19.73 hit in September 2025.
The move led the S&P 500 on Friday and snapped a six-session losing streak for the stock.
The Warner Bros. Deal
The upgrade is largely built around Paramount’s $81 billion acquisition of Warner Bros. Discovery, which was agreed in late February after a competition with Netflix.
The deal includes major intellectual properties — Harry Potter, Game of Thrones, and the HBO Max platform.
It is expected to close in Q3 2026, pending regulatory approval from the Department of Justice and European agencies.
Morgan Stanley believes the acquisition gives Paramount a faster path to growing its streaming and studio businesses.
Duffy says the company can cut more than $6 billion in costs — around 11% of operating expenses — through consolidation, with AI playing a role in unlocking those savings.
Risks Still on the Table
The merger isn’t without headwinds. Warner Bros. Discovery shareholders approved the deal eight days ago, but that news actually sent PSKY down 5% at the time.
Investors focused on the debt load. The deal has been described as the biggest leveraged buyout in history, carrying over $54 billion in debt financing.
A lawsuit from a group of streaming subscribers is also seeking to block the merger, with plaintiffs claiming it could raise prices and reduce viewing options for consumers.
PSKY has been volatile — the stock has made more than 30 moves of 5% or greater over the past year.
At its current price of $11.13, investors who bought $1,000 worth of PSKY five years ago would have just $280.51 today.
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