Why This Noted Media Analyst Updated His Models On TV Network Owners

Brian Wieser of Pivotal Research has upgraded shares of Walt Disney Co DIS to Buy from Hold and revised price targets of other TV network owners such as CBS Corporation CBS, Discovery Communications Inc. DISCA, Time Warner Inc TWX, Twenty-First Century Fox Inc FOXA and Viacom, Inc. VIAB.

The analyst, who has a Buy rating on all of the above stocks, raised his price targets on TV network owners following the application of the market's implied lower costs of capital.

As a result, Wieser said price targets are now $63 for CBS, $36 for Discovery, $121 for Disney, $36 for Fox, and $95 for Time Warner. The earlier price targets were $56 for CBS, $31 for Discovery, $104 for Disney, $31 for Fox and $83 for Time Warner.

Related Link: Pivotal Not Worried About Disney CEO And ESPN Concerns, Upgrades Stock To Buy

On Disney, the analyst recognizes Wall Street's concerns on slowing subscriber growth at ESPN and the CEO succession. But, he says the ESPN concerns are "appropriately priced" into the stock and the succession issue can be "managed through."

Wieser also noted the opening of Shanghai Disney Resort in June and the upcoming film slate such as next Star Wars installment, Rogue One and new properties such as Zootopia as potential catalysts for Disney shares.

Meanwhile, Wieser maintained his $55 price target for Viacom whose shares are under pressure from investor concerns on ownership, governance and management. Though the analyst reduced the market-level costs of capital, he added back capital costs to reflect a resumption of "toxicity" in the stock.

"In our view, the business clearly has value that is under-appreciated by the investment community even as it appears to under-perform both in the media networks and film division even vs. what were previously soft expectations," Wieser noted.

However, the analyst said it remains difficult to predict "whether or not catalytic events will occur" that may change the outlook of investors outlook on the stock.

According to TipRanks, Wieser has a success rate of 81 percent with an average return per recommendation of +14.8 percent. The analyst is ranked 105 out of 3,880 analysts.