Brean Capital Downgrades Viacom (VIAB) to Hold; Merger with CBS Does Not Maximize Value

November 14, 2016 6:01 AM EST
Get Alerts VIAB Hot Sheet
Price: $40.23 +1.08%

Rating Summary:
    15 Buy, 25 Hold, 3 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 30 | Down: 30 | New: 23
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Brean Capital downgraded Viacom (NASDAQ: VIAB) from Buy to Hold with a fair value target of $40.00 (from $44.00), saying combining CBS (NYSE: CBS) and VIA does not maximize value.

Analyst Alan Gould commented, "We are lowering our rating on Viacom to Hold from Buy and our fair value estimate becomes $40 from a TP of $44, the expected value in our VIA/CBS scenario analysis. We are lowering our probability of a CBS/VIA merger to 40% from 60% as we question the true synergies between the companies, and lowering our FY17 EPS estimate to $3.65 from $3.80. Our $40 fair value estimate equals 11x EPS, 9x EV/EBITDA and a 7% free cash flow yield based on our FY17 estimates which are somewhat below Street consensus."

For an analyst ratings summary and ratings history on Viacom click here. For more ratings news on Viacom click here.

Shares of Viacom closed at $38.42 yesterday.

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