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Viacom Is Making The Right Investments, Macquarie Says In First Bullish Turn On Telecom

Viacom Is Making The Right Investments, Macquarie Says In First Bullish Turn On Telecom
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For the first time ever, Macquarie is recommending Viacom, Inc. (NASDAQ: VIAB) and said the telecom is making the right investments in data and technology.

The Analyst

Analyst Tim Nollen upgraded Viacom from Neutral to Outperform with a price target lifted from $34 to $37.

The Thesis

The bullish case for Viacom is viable now, as the company's investments in technology to collect quality consumer data that will drive a higher share of premium-priced ads, Nollen said in the upgrade note. (See his track record here.) 

The company's leadership in OpenAP has resulted in new ways to find audiences in the upfront market, and its advanced marketing solutions group now accounts for nearly 10 percent of Viacom's U.S. ad base and is growing by as much as 40 percent, the analyst said. 

Viacom's future success is predicated on a stabilization of subscribers — which isn't guaranteed — but management is making the right moves to create better carriage terms with its affiliates, Nollen said. The Paramount unit is showing signs of rebounding and should post revenue and EBITDA growth next year, he said. 

Any prior merger talks with CBS Corporation (NYSE: CBS) are "evidently off the table as a forced acquirer," the analyst said. Investors should look at Viacom's stock by itself, and it is looking cheap, Nollen said, with Macquarie's $37 price target based on an 8 times PE multiple, a discount to peers.

Price Action

Viacom Class B shares were up 3.45 percent at $31.79 at the time of publication Thursday. 

Related Links:

Analysts: Moonves Trouble Creates Overhang For CBS Stock, Renders Viacom Merger 'More Inevitable'

Experts: Viacom-Netflix Deal Could Spark New Media Trend Toward OTT Content Partnerships

Photo by Diogo Almeida/Wikimedia. 

Latest Ratings for VIAB

Nov 2018CitigroupMaintainsNeutralNeutral
Nov 2018UBSDowngradesBuyNeutral
Oct 2018Imperial CapitalUpgradesUnderperformIn-Line

View More Analyst Ratings for VIAB
View the Latest Analyst Ratings

Posted-In: Macquarie Research Paramount Tim Nollen tvAnalyst Color Upgrades Price Target Analyst Ratings Best of Benzinga


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