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Benchmark Raises CBS Price Target To $65 Amid Stable Ad Trends

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CBS Corporation NYSE:CBS - Benchmark Raises CBS Price Target To $65 Amid Stable Ad Trends

CBS Corporation CBS 1.61% shares have gained 20 percent since February 3. Benchmark’s Daniel L. Kurnos maintained a Buy rating for the company, while raising the price target from $56 to $65.

CBS is likely to report robust 1Q16 results, driven by Super Bowl related benefits and other one-off items, Kurnos said. Revenues are likely to be in-line, with some modest EPS outperformance, reflecting the company’s continued underlying Network strength.

Improved Near-Term Outlook

The company’s near-term growth prospects appear bright, given a stable ad market, ramping retrains, improving OTT penetration and the longer-tailed benefits derived from the monetization of out-of-home rights, Kurnos noted.

Favorable underlying trends in the ad market are expected to result in healthy participation in the upcoming network. The analyst added that the company’s dominant content position should mitigate concerns associated with the adoption of the new metrics.

CBS is expected to generate $1.1 billion in reverse/retrains in 2016. The company is also poised to benefit from improved OTT penetration, especially the bundling of All Access and Showtime and the launch of an ad-free offering, Kurnos mentioned.

The company should be able to reap more benefits from the monetization of its out-of-home rights in the next round of MVPD negotiations. The analyst expects CBS to generate 4 percent y/y revenue growth and 10 percent OIBDA growth in 2016.

May 2016BenchmarkMaintainsBuy
Apr 2016RBC CapitalInitiates Coverage onOutperform
Mar 2016Deutsche BankMaintainsBuy

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