MoffetNathanson on Friday downgraded shares of Paramount Global to underperformer and lowered its price target to $18/share from $30, citing the risk of lower future ad spend. “Despite continued momentum at Paramount+, we downgrade PARA because the growing risk of lower advertising puts further pressure on EBITDA and FCF growth,” wrote analyst Robert Fishman in a note. of the company to match previous levels”. Shares of the media company fell more than 3% in early trading on Friday following the downgrade. To date, the stock is down more than 16% year-over-year as of Thursday’s close. The potential for an upcoming recession in the US is behind the company’s fear that ad spending will continue to slow. According to the note, ad spending is often correlated with broader economic activity and has slowed during previous recessions. “Of course, media stocks are signaling cloudy skies ahead as they sell off as it becomes increasingly clear that the advertising slowdown is real,” Fishman said. “So far, TV advertising has not declined as rapidly as digital advertising due to both the high volume of ads that come from upfront commitments and the need for larger brand advertisers to continue to reach audiences. large-scale fakes through sports and other live shows.” However, that could change if the economy deteriorates, he said. The company expects US advertising to drop 10% this year if there is a recession, according to the note. “Initial signs of slowing ad demand from digital as well as traditional media suggest we are getting closer to a more severe decline,” he said. — Michael Bloom of CNBC contributed reporting.