Analysts Have Conflicting Sentiments on These Services Companies: CBS Corp (NYSE: CBS), Wayfair (NYSE: W) and Scientific Games (NASDAQ: SGMS)

By Ryan Adsit

Analysts have been eager to weigh in on the Services sector with new ratings on CBS Corp (NYSE: CBS), Wayfair (NYSE: W) and Scientific Games (NASDAQ: SGMS).

CBS Corp (NYSE: CBS)

J.P. Morgan analyst Alexia Quadrani reiterated a Buy rating on CBS Corp (NYSE: CBS) today and set a price target of $69. The company’s shares opened today at $57.44, close to its 52-week high of $58.35.

Quadrani observed:

“We reiterate our Overweight rating for CBS and our conviction in the company as a top pick in media, following another impressive quarter with upside to EPS which came in at $1.05 vs our $0.99 and consensus of $0.98. Cable Networks drove the upside surprise with largely in-line results in other segments. Double- digit retransmission revenue growth, strong content sales and better than expected ad revenues all helped deliver nearly 20% EPS growth. Management stressed the diversity in revenue in the quarter with only 43% coming from advertising. Also notable on the call was the announced accelerated buyback with an additional $1b in share repurchases expected for Q4 from a recent debt raise in addition to the normal $500m planned. Our full year EPS estimate comes up from $4.08 to $4.12 on flow through of this beat, partly offset by a lower Q4 ($1.12 vs. $1.15 prior) which comes down on lower Cable Networks (on pull through of some content sales strength into Q3). CBS remains our near-term top pick in media with healthy earnings growth momentum (now +24% in 2016E on our positive revision) with a solid outlook for 2017 driven by retrans and content growth on a difficult advertising comparison.”

According to TipRanks.com, Quadrani is a 4-star analyst with an average return of 6.6% and a 52.5% success rate. Quadrani covers the Services sector, focusing on stocks such as Interpublic Group of Companies, Madison Square Garden Co., and Cinemark Holdings Inc.

Currently, the analyst consensus on CBS Corp is Strong Buy and the average price target is $66.08, representing a 15.0% upside.

In a report issued on October 20, Brean Capital also reiterated a Buy rating on the stock with a $65 price target.
Wayfair (NYSE: W)

J.P. Morgan analyst Christopher Horvers reiterated a Hold rating on Wayfair (NYSE: W) today and set a price target of $44. The company’s shares opened today at $32.02, close to its 52-week low of $28.85.

According to TipRanks.com, Horvers is a 4-star analyst with an average return of 5.7% and a 58.7% success rate. Horvers covers the Services sector, focusing on stocks such as Dick’s Sporting Goods, Genuine Parts Company, and Container Store Group.

Wayfair has an analyst consensus of Moderate Buy, with a price target consensus of $49.40.

Scientific Games (NASDAQ: SGMS)

J.P. Morgan analyst Joseph Greff reiterated a Hold rating on Scientific Games (NASDAQ: SGMS) yesterday and set a price target of $12. The company’s shares opened today at $11.60.

Greff wrote:

“While 3Q results were more or less in line with our expectations (upside gaming results, a nice change, though lottery missed our estimate, partially on f/x), the focus was on the company’s new cost reduction initiatives. SGMS announced a plan to reduce its cost structure by an annualized rate of $75 million, which should be largely implemented by year-end 2016 at a cost of $20 million. We get the sense that most of the cost savings will be headcount related, and split roughly equally between Gaming, Lottery, and corporate (Interactive costs should continue to tick higher on increased marketing/R&D). While we find the move encouraging, as it will serve to improve EBITDA growth and the company’s path to deleveraging, we are more interested in the SGMS’s strategic plans for its social gaming division, which it designated as an unrestricted subsidiary in early September. We remain Neutral and establish a year-end 2017 price target of $12.”

According to TipRanks.com, Greff is a 5-star analyst with an average return of 9.9% and a 55.0% success rate. Greff covers the Services sector, focusing on stocks such as Pinnacle Entertainment, Penn National Gaming, and Red Rock Resorts Inc.

Scientific Games has an analyst consensus of Hold, with a price target consensus of $9.