BMO Downgrades CBS, Highlights New Media's Pecking Order

BMO Capital Markets downgraded shares of CBS Corporation CBS citing valuation. The firm said it believes the best mix shift story in media is fairly valued and that CBS will become a deal stock with Viacom, Inc VIAB.

Analyst Daniel Salmon clarified that the outcome is not 100 percent yet and that he would be fundamentally productive in the mid-$50s. That said, the analyst believes the stock has worked through several catalysts, including an accelerated buyback this quarter.

Even as the firm is of the view that patient investors can hold and work through a merger, it recommends Twenty-First Century Fox Inc FOXA if fundamental investing is still the priority.

BMO's new media pecking order are as follows:

• Twenty-First Century Fox
• Time Warner Inc TWX
• CBS
• Viacom
• Walt Disney Co DIS

As such, BMO downgraded shares of CBS to Market Perform from Outperform, while maintaining its price target at $63.