Analyst Upgrades CBS Corp. to Top Stock Pick

7:15 AM PDT 3/14/2012 by Georg Szalai

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RBC's David Bank says "the perception is that 2013 could be a difficult comparison year," but takes a contrarian view.

NEW YORK - RBC Capital Markets analyst David Bank on Wednesday upgraded CBS Corp. to his top stock pick in the entertainment industry, saying he is more bullish on the company's outlook for 2013 than others on Wall Street.

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He has a $38 price target on the stock, which he previously rated "outperform," even though the stock has done well and hit a 52-week high at the end of last week.

"Given the impact of political advertising and a major slug of over the top- related digital distribution fees in 2012, the perception is that 2013 could be a difficult comparison year," Bank wrote in a report. "We take a contrarian stance introducing Street high 2013 estimates on top [of] above-consensus 2012 estimates."

Continued growth in retransmission consent fees, reverse compensation from TV station affiliates next year's SuperBowl, traditional syndication, lower interest and other expense and continued stock buybacks, which boost earnings per share, will be among the contributors to growth next year, he predicts. "We believe incremental over the top, retrans/reverse compensation, traditional syndication, Super Bowl, improvements to below-the-line items and share repurchases will help drive estimated 27 percent earnings per share growth in 2012 and another about 18 percent in 2013."

The stock of CBS, led by CEO Leslie Moonves, hit another 52-week high in early Wednesday trading and was up about 1.5 percent around 9:45 a.m. ET.

Email: Georg.Szalai@thr.com

Twitter: @georgszalai