Market Overview

It Might Be A Good Time To Buy CBS Shares

It Might Be A Good Time To Buy CBS Shares

CBS Corporation (NYSE: CBS) declined about 9 percent thus far in September, in sympathy with other media stocks. They were on the wane over the past few weeks after Walt Disney Co (NYSE: DIS) provided below-consensus guidance for 2017 and Comcast Corporation (NASDAQ: CMCSA) announced that third quarter subscriber numbers will decline.

Despite CBS faring the worst among the traditional media stocks, Rosenblatt Securities believes the company's retrains and reverse comp provides a predictable earnings growth stream, given that it's driven by payment from affiliated on a per market basis and not by subscriber numbers.

Analyst Alan Gould estimates that the earnings per share of CBS will grow at 15 percent CAGR through 2020, while shares trade at only 13 times this year's estimated earnings per share of $4.50.

Therefore, the analyst recommends buying CBS shares on the dip. Rosenblatt Securities reiterated its Buy rating and $80 price target on CBS.

See Also: 5 Takeaways From The 'Future Of Media Summit'

The firm believes the next NFL licenses are likely to be much more expensive for networks despite lower ratings, given the interest by the digital companies. Ratings drive future license fees, the firm noted.

Additionally, Rosenblatt noted that CBS seems to have successfully outbid Lachlan Murdoch and James Packer for the control of Network Ten, one of the three main broadcast networks in Australia. The firm expects CBS to pay about $200 million for the entity, with the deal expected to close in the fourth quarter.

Rosenblatt believes the next data point that could drive the stock higher will be the ratings for the next season and the reception for "Star Trek: Discovery." The firm thinks this will be the most important new content to be added to CBS All Access, its OTT service.

Rosenblatt also pointed out that advertising comparison becomes easier in the second-half of the fiscal. The firm expects the radio spin and exchange offer to close in the fourth quarter. The firm estimates that the transaction will lower CBS shares by 17 million, marking effectively a $1.1 billion share buyback program, representing 3.5 percent of outstanding CBS shares.

"We continue to expect the licensing or syndication of Scorpion, NCIS New Orleans and Madam Secretary this year, but do not believe any deals have been struck yet," Rosenblatt said.

Latest Ratings for CBS

Nov 2019MaintainsBuy
Oct 2019MaintainsBuy
Oct 2019MaintainsOutperform

View More Analyst Ratings for CBS
View the Latest Analyst Ratings

Posted-In: Alan Gould Rosenblatt SecuritiesAnalyst Color Reiteration Analyst Ratings Best of Benzinga


Related Articles (CMCSA + CBS)

View Comments and Join the Discussion!

Latest Ratings

VALB of A SecuritiesMaintains5.0
HALB of A SecuritiesMaintains28.0
PPLB of A SecuritiesMaintains35.0
PNWB of A SecuritiesMaintains97.0
IRBTB of A SecuritiesMaintains56.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at