Wunderlich Initiates Central European Media With Buy Rating, $3.30 Target

"These markets are achieving GDP growth rates generally superior to 'old Europe' economies, coincident with gradual increases in the share of GDP dedicated to advertising," analyst Matthew Harrigan wrote in a note.

Harrigan noted the long-term growth of the company should be powered by modest advertising shares to GDP and ample headroom for advertising outside traditional consumer goods mainstays.

An analysis cited by co-CEO Christoph Mainusch said TV advertising is actually increasing share of the overall advertising pie in CETV markets, up from 47 percent to 54 percent in 10 years.

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"CETV is the 'whale' across its markets, with broadcast viewing share ranging from 29 percent to 49 percent during Q216, while achieving superior power ratios (share of advertising spend relative to viewing)," Harrigan noted.

Meanwhile, internet TV firms such as Netflix, Inc. NFLX are not a threat to CETV due to the availability of low cost content and continued dominance of terrestrial broadcasters.

Moreover, the analyst cited the possibility that 76 percent pro forma equity owner Time Warner Inc TWX could buy the 24 percent public float as Time Warner CEO Jeff Bewkes emphasizes on growing the company's international business.

Shares of Central European Media closed Wednesday's trading at $2.24 and were up 4.02 percent to $2.33 at time of writing Thursday.

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