CBS Corp. Stock Rises as Analysts Laud Latest Earnings

CBS Logo Black Border - P 2011

Despite recent ratings weakness, "we came out of the quarter encouraged," one Wall Street observer says.


The stock of CBS Corp. opened Thursday's stock market trading session with gains after most analysts said the company's third-quarter financials and earnings call managed to address recent investor concerns.

Amid worries about a weak ratings start to the fall TV season, CBS shares have been trending lower in recent weeks.

As of 9:45am ET on Thursday, the stock was up 3 percent at $35.03. Over the past year, it has traded as low as $23.35 and as high as $38.32.

"We came out of the quarter encouraged," said Sanford C. Bernstein analyst Todd Juenger on Thursday morning though. "We believe in the long run, ratings do not oscillate randomly - they are a function of skilled creative leadership. CBS has that."

He increased his price target on the stock by $2 to $39 and maintained his "market perform" rating, which is similar to other Wall Street analysts' "neutral" ratings.

"The core of any CBS investment thesis is TV advertising and retrains," Juenger explained. "Last night, CBS had some really powerful statements to make on each of these. Network revenue seems less impacted by ratings declines, and retrans is growing faster than expected - again."

Evercore Partners analyst Alan Gould focused on similar themes in a report entitled "Licensing Deals Supersede Early Ratings Declines." Highlighting the financial benefits of digital licensing deals with the likes of Netflix and, he maintained his "equal weight" ratings and $38 price target on CBS shares.

"Management lays out [a] bullish case for 2013 despite weak new prime time season ratings," he wrote. "CBS has struck enough licensing deals that we believe our fourth-quarter and 2013 earnings estimates are not in jeopardy. More importantly, we do not believe CBS's long primetime winning streak has come to an end."

Barclays Capital analyst Anthony DiClemente said: "Given our expectation for a ratings recovery at the network beginning in the first quarter and a robust syndication pipeline, we are maintaining our above-consensus 2013 earnings per share [estimate]" and $42 price target.

He maintained his "overweight," or "buy," rating on the stock.

Nomura analyst Michael Nathanson minimally lowered his price target from $38 to $37 and maintained his "neutral" rating, striking more cautious tones. "The company continues to surprise with higher earnings revisions," he said. "However, this is offset by growing uncertainty on the underlying advertising trends."

Twitter: @georgszalai