CBS Estimates Lowered on Exposure to Deteriorating Ad Trends
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A quick summary from his January 5, 2009 report follows:
"We are lowering 4Q08 and 2009 estimates to align our CBS model with our Barclays Capital team estimates for 2009 and 2010 U.S. advertising trends (-10% and +1%, respectively). Given CBS's outsized exposure to deteriorating TV advertising trends, we believe downward 2009 and 2010 EPS revisions remain necessary. As such, we reiterate our 3-Underweight rating.
CBS 4Q08E EPS goes to $0.23 from $0.27 as 4Q08E EBITDA goes to $528M from $576M. 2009E EPS goes to $0.90 from $1.05 as 2009E EBITDA goes to $2.05B from $2.22B. 4Q08 and FY09 consensus EPS is currently $0.28 and $1.13, respectively.
Our largest model changes come at the Television segment, where our 09E EBITDA estimate came down by $115M. Further downside to margins is possible if cost cuts and layoffs do not continue to mitigate revenue losses. 2009E revenue estimate is $13.1B; every $100M of EBITDA lost equates to roughly $0.10 of EPS.
Importantly for the stock, another down year in 2010 could put CBS's dividend at further risk. Clearly, 2010 estimates are the key for CBS shares, and visibility here remains limited."
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