BofA analyst Jessica Reif Ehrlich upgrades Paramount Global (NASDAQ:PARA) from Neutral to Buy and raises the price target from $24 to $32.

The analyst views that PARA has a unique collection of assets that would generate significant buyer interest if ever put up for sale- either in pieces or whole.

Recent press reports suggest interest from at least four qualified buyers for BET Media Group on the heels of an unsolicited $3 billion offer for Showtime from David Nevins, former CEO of Showtime (PARA declined). The analyst believes these press reports validate her thesis.

The analyst notes that other assets, such as Nickelodeon, Paramount Studios, and CBS Networks, could also be in high demand given their strategic value.

It is not difficult for the analyst to contemplate a scenario where the sum of the various assets is worth more than PARA's consolidated Enterprise Value.

While handicapping the precise timing of a strategic pivot is challenging, the analyst believes the inherent asset value of PARA's portfolio provides a floor in shares over the near term.

Any decision to sell would require approval by Shari Redstone, Chairwoman of PARA.

In the near term, PARA appears focused on scaling its flagship DTC service, Paramount+.

The analyst had concerns regarding PARA's ability to manage the transition toward streaming while balancing the cannibalization of the legacy businesses given their relatively smaller scale vs. peers.

However, the analyst views the two most likely outcomes from this transition as positive for shares as either: 1) PARA successfully executes on their pivot toward streaming, which would re-accelerate earnings growth in FY24 and beyond, or 2) PARA struggles to profitably scale PARA+ and FCF which could lead the company to sell-in likely at a significant premium to current market levels.

The analyst believes if fundamental conditions remain challenging, there are several areas where PARA could cut hundreds of millions in costs to maintain profitability levels.