Paramount Global (PARA) is facing macroeconomic headwinds that could hurt its advertising business, Deutsche Bank said in a note e-mailed Wednesday.

The brokerage downgraded its rating on the media, streaming and entertainment company's stock to hold from buy and trimmed its price target to $12 from $15. Deutsche Bank cut estimates for Paramount's earnings before interest, taxes, depreciation, and amortization through 2027.

The brokerage previously viewed Paramount's shares as attractive given that class B shareholders could sell up to half of their shares for $15 per share under a merger agreement with Skydance Media that was announced in July.

"We see the risk/reward as more balanced now, especially in light of what we see as increasing risk to the advertising outlook due to macroeconomic factors," Deutsche Bank analyst Bryan Kraft wrote. Paramount's stock is trading at its highest level since July.

Advertising revenue within the direct-to-consumer segment grew 18% in 2024 and was largely flat for its TV media division.

Kraft said there are other more appealing investment options available in the sector such as Warner Bros. Discovery (WBD) and Walt Disney $(DIS)$, both of which offer better clarity into their outlooks. The analyst also prefers names like Fox $(FOXA)$ and Liberty Media (FWONA, FWONK) that are better positioned to weather a cyclical downturn.

"The media industry has continued to evolve over the past nine months since the merger agreement was signed, but we don't know how Skydance's plans and targets have evolved in response to such changes," Kraft said. "We will reserve judgment until we hear more from management regarding their strategy, tactical plans, potential asset dispositions and acquisitions, and anticipated financial performance."

Paramount said in February that the Skydance transaction was expected to complete within the first half of this year.