Analyst Cuts CBS Corp. Stock Price Target, Citing 'Awful Start' to U.S. Fall TV Season

Sanford C. Bernstein analyst Todd Juenger on Tuesday lowered his price target on CBS Corp.'s stock by $2 to $37, citing the "awful start" to the U.S. fall TV season for broadcasters that led him to bring down his earnings forecasts for the company.

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"CBS should get better," he argued though in reiterating his "market-perform" rating on the stock, which is similar to other analysts' "neutral" rating.

Juenger reduced his 2012 and 2013 earnings by share forecast for CBS Corp. by 7 cents, down 3 percent, and 13 cents, down 5 percent, respectively.

"Preliminary broadcast ratings in the adults 18-49 demo have been down significantly through the first two weeks of the 2012/2013 season," Juenger wrote in a report. "CBS ratings are down 25 percent, but we are only reducing CBS' TV network ad revenue forecast by 5 percent for the next three quarters."

His reasons: "Declines are much less severe (about 15 percent) on a total audience basis than among the adults 18-49 demo," and viewership including DVR playback "will provide a lift." The analyst also highlighted that CBS ratings comparisons are getting easier over time.

CBS Corp.'s shares have outperformed the stocks of other entertainment giants in recent years.

The company announced late Monday that CEO Leslie Moonves has extended his employment contract through mid-2017.

CBS shares on Monday closed at $34.03, giving the company a market value of $21.8 billion. The closing price was down from the stock's 52-week high of $38.32, established in late September. Its 52-week low of $22.77 goes back nearly a year.

Last week, Davenport & Co. analyst Michael Morris had also lowered his 2012-13 ad growth estimate for CBS by 7 percent following the weak first two weeks of the TV season.

He cut his price target on the stock by $5 to $38, but maintained his "buy" rating.

"The ratings decline magnitude was clearly a surprise and our estimate adjustment is significant," Morris said. "CBS shares will likely remain challenged in the near term as investors seek consensus on 2013 earnings and sell-side estimates are adjusted downward."

But he also expressed confidence longer-term. "[The] fall slate lacks new home runs, but still has syndication potential," Morris wrote. "We are less concerned about the longer-term impact to the syndication pipeline than the initial ratings may imply."

Email: Georg.Szalai@thr.com
Twitter: @georgszalai