Paramount Skydance (PSKY) Shares Surge 8% on Morgan Stanley’s Double Upgrade

TLDR

• Morgan Stanley elevated PSKY’s rating from Underweight to Overweight, causing the stock to surge 8.5% to $11.12
• The price target was increased to $14 from $11, indicating a potential upside of approximately 26%
• This upgrade is linked to Paramount’s $81 billion acquisition of Warner Bros. Discovery
• The transaction is projected to yield more than $6 billion in cost efficiencies, partially through the use of AI
• PSKY remains down about 17% year-to-date and is trading 43.6% below its 52-week peak

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(SeaPRwire) –   Paramount Skydance (PSKY) shares climbed 8.5% to $11.12 on Friday following a double upgrade from Morgan Stanley, which shifted its rating from Underweight to Overweight.

Paramount Skydance Corporation Class B Common Stock, PSKY

The financial institution also elevated its price target to $14 from $11 — representing roughly a 26% premium over the stock’s pre-announcement trading level.

Sean Duffy, an analyst at Morgan Stanley, described this as the firm’s “riskiest and most out-of-consensus call.” The upgrade capitalizes on investor skepticism, contending that the stock’s year-to-date declines have presented a chance to buy.

PSKY’s value is still approximately 17% lower in 2026, and it trades 43.6% beneath its 52-week peak of $19.73, reached in September 2025.

This upward movement positioned it as a leader on the S&P 500 on Friday and ended a six-day consecutive decline for the shares.

The Warner Bros. Deal

The upgrade is primarily predicated on Paramount’s $81 billion acquisition of Warner Bros. Discovery, an agreement reached in late February following a competitive bid against Netflix.

The transaction encompasses significant intellectual properties — Harry Potter, Game of Thrones, and the HBO Max streaming service.

The deal is anticipated to finalize in Q3 2026, contingent upon regulatory clearances from the Department of Justice and European authorities.

Morgan Stanley posits that this acquisition offers Paramount a more rapid route to expanding its streaming and studio operations.

Duffy indicates that the company could reduce over $6 billion in expenses — roughly 11% of operating costs — through consolidation, with artificial intelligence contributing to realizing these savings.

Risks Still on the Table

The merger faces challenges. While Warner Bros. Discovery shareholders approved the transaction eight days prior, that announcement paradoxically caused PSKY’s stock to drop 5% then.

Investors concentrated on the substantial debt. The agreement has been characterized as the largest leveraged buyout ever, involving more than $54 billion in debt financing.

Furthermore, a lawsuit initiated by a group of streaming subscribers aims to prevent the merger, with the plaintiffs asserting it could lead to higher prices and fewer viewing choices for consumers.

PSKY has demonstrated volatility — with the stock experiencing over 30 movements of 5% or more in the last year.

At its present price of $11.13, an investment of $1,000 in PSKY five years ago would now be worth only $280.51.