Analyst Upgrades CBS
September 16, 2009
NEW 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
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
"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.