CBS A Buy, With Or Without Viacom Merger

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Wunderlich thinks CBS Corporation

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(NYSE: CBS) is a worthly Buy whether the company acquires Viacom, Inc. (NASDAQ: VIAB) or not. The firm initiated coverage with a Buy rating even on a standalone basis and set a target price of $72 implying upside potentials of more than 25 percent from the current levels.

Analyst Matthew Harrigan sees the stock's potential of reaching possibly as high as $80 if the management achieves the $3.75 billion total top-line growth and the other three main objectives ahead of the schedule in 2020.

In a research note, the brokerage told its clients, "Our baseline forecast through 2020 assumes that management achieves all of its four main objectives for $3.75 billion in high-margin revenue growth, with the exception that retransmission/reverse compensation is modeled at $2.0 billion vs. $2.5 billion."

Wunderlich cited out the following other three key factors that builds beyond the $1.75 billion growth:

$800 million international growth from Showtime and Television Studios.
$800 million in OTT sales from Showtime and Access.
$450 million from skinny bundle and monetization of post C7 viewing.

The brokerage pointed out the CBS owns over 80 percent of its prime time schedule, citing 16 of the 17 prime time season for the current year. Harrigan thinks this equates to big advances in product monetization citing that international sales reached $1.5 billion compared to $500 million a decade ago.

At last check, CBS was up 2 percent at $57.59, and Viacom was up 3.12 percent at $37.64.

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