Pacific Crest Reiterates a Hold Rating on CBS CorpBy Jason Carr
“We view the risk/reward on CBS as slightly positive. Core trends are largely stable despite pressure on viewership, and the company’s position as a keystone to any TV offering provides some stability in the outlook. We see 12-month fair value at $60. Content licensing, book sales and lower taxes drive Q3 upside. Content licensing and distribution of $1.1 billion beat our estimate of $1.0 billion due in part to the sale of Penny Dreadful. Advertising revenue declined 1% y/y to $1.47 billion, which was lower than our estimate of $1.54 billion, likely due to soft ratings performance. Lower-than-expected tax expense added $0.12 to adjusted EPS, driving it to $1.15 versus our estimate of $0.97 and consensus of $0.98. Core trends are stable, but unspectacular. Viewership of CBS shows is declining, in line with broader trends in pay TV. While this is currently offset by strong pricing, viewership trends will likely have to stabilize to meet longer- term expectations for growth. Separately, deteriorating syndication seems likely to drive content licensing down for the third consecutive year in 2016, and retransmission appears to be decelerating. While there are some offsets to these, we believe CBS’s growth rate going forward is likely to be modest. Little update on Viacom timing. We continue to believe a merger with Viacom is likely and believe the transaction could be a slight positive if CBS is given control to dispose of assets.”
According to TipRanks.com, Hargreaves is a top 100 analyst with an average return of 17.5% and a 59.1% success rate. Hargreaves covers the Services sector, focusing on stocks such as Discovery Comms., MSG Networks Inc, and Scripps Networks.
CBS Corp has an analyst consensus of Strong Buy, with a price target consensus of $66.10.
CBS Corp’s market cap is currently $24.75B and has a P/E ratio of 16.42. The company has a book value ratio of 4.5941.
Based on the recent corporate insider activity of 81 insiders, corporate insider sentiment is neutral on the stock. Most recently, in August 2016, Leonard Goldberg, a Director at CBS sold 1,698 shares for a total of $87,905.
CBS Corp. operates as a mass media company, which creates and distributes content across a variety of platforms to audiences around the world. The company operates its business through following segments: Entertainment, Cable Networks, Publishing and Local Broadcasting. The Entertainment segment is composed of the CBS Television Network, CBS Television Studios, CBS Global Distribution Group, CBS Films and CBS Interactive. The Cable Networks segment is composed of Showtime Networks, CBS Sports Network and Smithsonian Channel. The Publishing segment is composed of Simon & Schuster, which publishes and distributes consumer books under imprints such as Simon & Schuster, Pocket Books, Scribner, Gallery Books, Touchstone and Atria Books. The Local Broadcasting segment is composed of CBS Television Stations and CBS Radio. CBS was founded by Sumner Murray Redstone in 1986 and is headquartered in New York, NY.