Holding pattern

Recession fears snare Viacom stock

Viacom has been trading in a fairly tight range, with its 52-week high at $45.03 and its low at $36, and some analysts, even the bullish ones, expect more of the same in the near term.

David Joyce of Miller Tabak, for example, has a "buy" rating on the stock and $51 target price, though he says not to expect better than $45 in the next 6-9 months.

Viacom shares closed Thursday at $38.62.

A lingering concern over a possible U.S. recession is the issue, though he acknowledged that Viacom "has little exposure to local advertising that should be most affected."

Viacom recently reported quarterly earnings that impressed many analysts, some of whom raised expectations for the stock. Barrington Research analyst Jim Goss upped his target from $45 to $47, for example.

Stanford Group analyst Clayton Moran, on the other hand, had a $48 target that he cut to $47, though he still maintains a "buy" recommendation on the stock.

"Viacom stands positioned as one of the more resilient, large capitalization media stocks," Moran said. "It trades at a market multiple of earnings-per-share and a modest valuation relative to its growth prospects."

He also likes that Viacom's online network has grown to 300 Web sites and that many of Viacom's top advertisers buy ads both on television and the Internet.

At the other end of the spectrum lurks SMH Capital analyst David Miller, who has a "sell" rating on the stock and seems to miss Viacom ex-CEO Tom Freston.

Under his "steady stewardship," Miller said, "MTV was able to stay atop the Nielsen cable ratings with hybrid scripted/ reality series like 'The Real World' and 'Laguna Beach.' Ad-vertisers ate it up."

Miller also is concerned about the current quarter, given that he now expects much of Paramount's P&A allocation to be expensed for this month instead of in April or May, as he previously expected.

The total P&A figure he is working with is expected to be a mighty $420 million due to what he says are "four event-driven, prime-mover films set to hit the marketplace in the next three months."

Those films are: "Iron Man" on May 2, "Indiana Jones and the Kingdom of the Crystal Skull" on May 22, "Kung Fu Panda" on June 6 and "The Love Guru" with Mike Myers and Justin Timberlake on June 20.
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