CBS Added To Morgan Stanley's Best Idea List

Morgan Stanley analysts Benjamin Swinburne and Hersh Khadilkar added CBS CBS to its best idea list.

Swinburne and Khadilkar believe CBS will deploy nearly $10 billion in financial capacity in fiscal year 2015 and 2016 into buybacks or M&A activity that will result in reasonable accretion. The analysts anticipate high single-digit operating income growth and mid-teen EPS growth through 2018.

Swinburne and Khadilkar said, “CBS is the most exposed name in our group to upside from content monetization over the next 2-5years (TV studio is greater than 25 percent of EBITDA versus 5-15 percent for peers.”

While CBS also has great growth prospects, the two analysts also highlight the relatively low valuation when compared to peers. Peers in the space Twenty-First Century Fox trades at 19.5 times earnings, whereas Time Warner trades at 21.4 times earnings.

Swinburne and Khadilkar have initiated a full year price target of $71 in their base case, and $84 in their bull case. Swinburne and Khadilkar estimate that CBS' EPS will be $3.31 in FY 2014 and $3.90 in FY 2015.

CBS recently traded at $57.82, up 0.59 percent.