Needham & Company Maintains a 'Buy' on Viacom (VIA-B); ROIC Trends - June Quarter
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Price: $44.76 --0%
Rating Summary:
2 Buy, 4 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 12 | Down: 23 | New: 22
Rating Summary:
2 Buy, 4 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 12 | Down: 23 | New: 22
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Needham & Company maintains a 'Buy' on Viacom (NYSE: VIA-B) price target of $63.00.
Needham analyst says, "There is currently a 90% correlation between FY12E ROIC and media industry share p50 rices. Highlights of VIAB’s capital allocation trends in the June 30, 2011 quarter include 1. Cash From Operations is a general proxy for ROIC trends. Cash from Operations posted positive results in VIAB’s June quarter, up 2% y/y to $392mm, after posting an 84% y/y increase to $731mm in the March quarter. 2. CapX is a lead-indicator of invested capital growth. Rising CapX implies a growing asset base, which can put downward pressure on forward-year ROICs. VIAB’s CapX is very small, but rose 16% to $35mm in the June quarter. 3. Investment in Films. VIAB’s investment in film and TV has been stable over the past 6 quarters and investment levels didn’t change much in the June quarter. 4. Return of Capital. If shares plus debt are shrinking, capital markets are “capturing” the ROIC. Rising ROICs are more valuable if they are “captured” because this lowers the risk of value destruction tied to acquisitions."
"We estimate that VIAB’s ROIC will increase by approximately 100 basis points from 14.4% in FY11E to 15.4% in FY12E."
For more ratings news on Viacom click here and for the rating history of Viacom click here.
Shares of Viacom closed at $45.40 yesterday.
Needham analyst says, "There is currently a 90% correlation between FY12E ROIC and media industry share p50 rices. Highlights of VIAB’s capital allocation trends in the June 30, 2011 quarter include 1. Cash From Operations is a general proxy for ROIC trends. Cash from Operations posted positive results in VIAB’s June quarter, up 2% y/y to $392mm, after posting an 84% y/y increase to $731mm in the March quarter. 2. CapX is a lead-indicator of invested capital growth. Rising CapX implies a growing asset base, which can put downward pressure on forward-year ROICs. VIAB’s CapX is very small, but rose 16% to $35mm in the June quarter. 3. Investment in Films. VIAB’s investment in film and TV has been stable over the past 6 quarters and investment levels didn’t change much in the June quarter. 4. Return of Capital. If shares plus debt are shrinking, capital markets are “capturing” the ROIC. Rising ROICs are more valuable if they are “captured” because this lowers the risk of value destruction tied to acquisitions."
"We estimate that VIAB’s ROIC will increase by approximately 100 basis points from 14.4% in FY11E to 15.4% in FY12E."
For more ratings news on Viacom click here and for the rating history of Viacom click here.
Shares of Viacom closed at $45.40 yesterday.
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