Refreshed investor view adds to ongoing Paramount Skydance stock rally

Alberto E. Rodriguez/Getty Images Entertainment

Paramount (NASDAQ:PSKY [https://seekingalpha.com/symbol/PSKY]) shares are climbing on Wednesday amid a broader rally in the U.S. markets as investors reset expectations for the newly revamped media company, which recently completed its $8B merger with Skydance Media.

PSKY is up 22.5% at $13.44 in early open market trading. Stock closed up 8% on Tuesday and snapped a three-day streak of underperforming sessions.

Wall Street investors in aggregate are optimistic and expect a better turnaround for Paramount under David Ellison's leadership, who battled lawsuits and struggled for almost a year convincing regulators to approve the merger transaction while simultaneously negotiating profitable content deals for its streaming platform.

Ellison now expects merger synergies to exceed his prior forecast of $2B and is currently focusing on investing in key growth areas like studios, streaming, and sports.

On Monday, the company struck a seven-year deal with UFC for rights to the league's content, for which it is shelling out over $1B annually. Analysts at Guggenheim on Tuesday initiated the media company with a bullish rating and set a price target of $13.

The research firm sees the UFC deal "as a meaningful indication of the company’s strategy to bolster its sports and streaming assets."

Just days before closing the merger, the company also managed to secure streaming rights to bring animated adult comedy show _South Park_ to Paramount+ for the first time at $300M a year for five years.

Ellison on day one promised to steer the company to be more tech-forward and cost-efficient, along with an entirely refreshed board of directors.

The move has already won over investors who blame the previous leadership for the company's financial woes and for not making use of the best-in-class media assets for lucrative deals.

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