CBS Corp. (CBS): Best Mix Shift Opportunity - BMO
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Rating Summary:
20 Buy, 12 Hold, 3 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 11 | New: 11
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BMO Capital analyst, Daniel Salmon, reiterated his Outperform rating on shares of CBS (NYSE: CBS) after 2Q16 EPS of $0.93 was ahead of consensus estimate of $0.86. Total revenue of $3.4B was ahead of consensus estimate of $3.2B. Segment operating income was well ahead in Entertainment ($351mm vs. our $292mm estimate and consensus of $299mm), largely driven by licensing deals, and in line with consensus across the other three segments. Underlying network ad growth was +2%, which decelerated from +8% in 2H15 and +12% in 1Q16 and slightly below our expectations. CBS repurchased $500mm of stock in the quarter (9.2mm shares) and earlier in the day, the Board also added another $5B to the $1B remaining on its authorization and raised the annual dividend by 20% to $0.72.
The analyst stated "We return the focus of our thesis back to CBS’s long-term mix shift opportunity, in which we have greater confidence. Concerns over a lull in licensing opportunities have not come to fruition as CBS has created opportunities with programming like Star Trek (licensed internationally to Netflix) and Carpool Karaoke (licensed to Apple). The pipeline should remain strong as well as CBS owns 80% of its primetime schedule, both of its late night shows (Colbert and Corden) and has a significant opportunity to continue licensing Showtime internationally".
No change to the price target of $63.00 which implies 10.1x 2017E OIBDA and a 9.4% FCF yield.
For an analyst ratings summary and ratings history on CBS click here. For more ratings news on CBS click here.
Shares of CBS closed at $54.21 yesterday.
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