Before CBS’ investor day on March 15, analyst Marci Ryvicker of Wells Fargo has upgraded the company’s stock to outperform.
Ryvicker downgraded CBS in August, but since then she says CBS has registered strong ad trends with a more accurate audience measurement system, an accretive NFL deal and much better monetization of Showtime. So why wait for the investor day, she figures.
“Where our thesis is still a little shaky is in traditional syndication and SVOD (Subscription Video-On-Demand) – this is where we hope to get some much needed comfort and clarity come 3/15. Our gut tells us it’s time to get involved here again – and would do so before next Wed.; hence, we upgrade to 1 from 2 and raise our valuation range to $58-60 from $48-50,” she said in a report Wednesday morning.
What she doesn’t expect at the meeting is long-term guidance (most media companies missed their long-term guidance anyway, she says), a buyback, a discussion on spectrum or an update to retrans.
Ryvicker looks at Showtime as CBS’ “hidden gem,” adding “we literally drool over the potential upside should Showtime successfully narrow that $1 billion plus OIBDA gap with HBO.”
Bottom line: “CBS is more structurally sound than its peers, hence [it] should trade at a premium.”
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