- Viacom is rebounding (VIA +4.6%, VIAB +5%) from a rampant selloff after earnings -- VIA was down 13.3% yesterday, and VIAB down 14.2% -- amid the feeling that it may have gotten swept up in a media meltdown following profits that beat expectations despite a (somewhat predictable) revenue decline.
- Analysts are stacking up cautious notes on VIAB today. Wells Fargo has downgraded the stock to Market Perform, and deep price target cuts are coming in: RBC Capital to $62 from $73; Wunderlich to $87 from $98; Stifel Nicolaus to $70 from $89; and Topeka Capital to $57 from $73.
- One defense comes from Barclays, which sees the stock may be oversold in upgrading to Overweight, from Underweight. Viacom had the most exposure to structural media shifts, Kannan Venkateshwar explains, but "At present levels however the stock is starting to price in extreme scenarios."
- Despite the two-notch upgrade, Barclays reduced its price target to $56 from $67, implying a 20%-plus upside.
- Viacom's greatest uncertainty lies in domestic ad growth rates and affiliate fees, but the stock already reflects "decline scenarios worse than newspapers."
- In the worst case, Viacom could trade on asset value/option value instead of earnings, setting a floor for the stock, Venkateshwar writes.
- Previously: Viacom dive accelerates, down more than 17%; Paramount boosting slate (Aug. 06 2015)
- Previously: Viacom sinks after revenues miss by nearly 5% (Aug. 06 2015)