09.16.2009 02:00 PM
Analyst Upgrades CBS
CBS LogoNEW YORK: Wells Fargo is upgrading CBS’s stock a notch. Analyst Marci Ryvicker bumped the stock from “outperform” to “market perform” this week.

“While we may be a little late to the party given CBS’s 34 percent gain since Aug. 6, versus the S&P 500, which is up 5 percent, we still see [approximately] 30 percent potential upside to the current price,” she said in note. “We took a more detailed look at our model to better incorporate certain near-term catalysts--Super Bowl, political and retrans--a stronger-than-expected scatter market and additional cost cuts.”

As a result, Wells Fargo raised its 2010 earnings per share estimate for CBS to 84 cents, up from 73 cents, which still may be “conservative,” she said. Consensus is at 77 cents.

“This is a name you want to own before the Q3 print, in our opinion,” Ryvicker said.

CBS chief Les Moonves noted at an investor conference last week that local ad revenues were improving quarter over quarter, and that the automotive, pharmaceuticals and financial segments were recovering. Upfront ad rates--CPMs--were down “slightly,” and 10 percent less inventory was sold during the pre-season ad sales rally than last year.

He described the scatter market as “remarkably good,” up in double-digit percentages form last year. Ryvicker said CBS was up by $30 million in scatter compared to a year ago and expected to remain strong during the fourth quarter.

Moonves also mentioned that CBS is looking at trimming local assets and possible merger opportunities, though nothing major.

Shares of CBS continue to climb, up from less than $10 Sept. 1 to more than $13 at one point today. Shares were trading at around $12.70 in mid-afternoon.

Previous TVB coverage of CBS:

July 28, 2009: CBC Expected to Meet the Street
"Given that Street estimates for CBS have continued to come down over the past month or so, we do not anticipate another significant miss, like what we saw in Q1. Nor do we anticipate a revision to management’s full year [operating income before depreciation and amortization] guidance of $1.725 billion to $1.925 billion. We remain at $1.742 billion.”

July 1, 2009: Deutshe Bank Cuts CBS Forecast
The investment bank scaled back its outlook because of skepticism about a rally in the media segment. Some investors see signs of the advertising market on a rebound the Deutsche analyst said, but that would be challenging “given the sorry state of the consumer.”

June 22, 2009:CBS CFO Steps Down
Fred Reynolds relinquished his CFO duties July 20, though he'll continue as an executive vice president, working with CEO Leslie Moonves on the transition of his responsibilities until his official retirement Aug. 15. He'll be succeeded by Joseph Ianiello, who's been deputy CFO since November.


June 8, 2009:S&P Cuts CBS Credit Rating
Standard & Poor's cut CBS's corporate credit rating from BBB to BBB- on Friday. The rating outlook is negative, and was downgraded in part on falling automotive revenues. A BBB- rating is S&P's lowest investment grade. CBS had debt of more than $7 billion at the end of March.

May 28, 2009:CBS Increases Senior Note Offering
CBS Corp. is reopening its senior note offering to raise another $250 million. The 8.875 percent notes come due in 2019. CBS previously issued $350 million in likewise notes on May 13, for a current total of $600 million. The two issuances, along with the $400 million of 8.2 percent senior notes due 2014 issued by the company May 13, bring CBS's total senior note offerings for the month to $1 billion.

May 8, 2009:CBS TV Segment Revenues Down 12 Percent
CBS's results for the first quarter reflected the absence of political spending on TV as well as the soft market. The TV operations generated $2.23 billion in revenue, down 12 percent from the $2.54 billion posted a year ago. Operating income for the stations and the network was $184.7 million, compared to $404.8 million a year ago.



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