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Broadband, Retrans Should Fuel CBS In ’07

Miller Tabak media analyst David Joyce restated his “neutral” rating and increased his 12-month price target on CBS Corp. to $35 from $31, mainly because the stock has already surpassed his previous target.

CBS was trading at $31.30 on Dec. 11. So far this year, the company’s stock has appreciated 19.5% or $5.10.

Joyce said that the appreciation in the share price is likely to continue next year, as are the stock’s quarterly dividends.

Joyce wrote that while there will be no political advertising in 2007, making revenue comparisons difficult, with most of its radio-station sales behind it, investors will focus more on television-station and network performance in 2007, which accounts for about 68% of annual revenue.

Joyce expects the TV business to experience upside from incremental digital media monetization through its Innertube broadband channel and from a trend toward capturing meaningful retransmission consent fees for its broadcast stations.

“In essence, we believe CBS shares will continue to appreciate, the dividends are likely to continue to increase, a share buyback program is likely in early 2007, and the fundamentals are relatively solid,” Joyce wrote, adding that CBS lacks the dual revenue streams of its peers with cable networks and that an uncontemplated acquisition poses a risk to the stock price.