Needham & Company Maintains a 'Buy' on Viacom (VIA-B); 4Q11 ROIC Analysis & FY12 Outlook
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Price: $44.76 --0%
Rating Summary:
2 Buy, 4 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
2 Buy, 4 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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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 93% correlation between FY12E ROIC and media industry share prices. Wall St closely follows the income statement, ie, the numerator. In this quarterly report, we analyze the denominator - trends in assets employed, capital intensity, and free cash flow. Highlights from VIAB’s capital allocation in the 9/30/11 quarter included: 1. Return of Capital was negative in the most recent quarter. If shares plus debt are shrinking, this implies less capital is being used in the business, which suggests rising ROICs. VIAB’s average Shares Outstanding rose by 2mm ($84mm) and Net Debt rose by $345mm in the Sept 2011 quarter. Therefore, VIAB’s capital required from capital markets rose by about $429mm in the September quarter. 2. CapX trends are a lead-indicator of ROIC growth. VIAB’s CapX fell 9% to $155mm in fiscal 2011, implying improving ROICs. 3. TV & Film. VIAB’s spends 32x more on buying and making film and TV programming than it does on capital spending. VIAB’s TV and Film inventory totaled $5.1B at 9/30/11, about flat over the past two years. 4. Total Assets rose by $491mm (up 2%) to $22.8B in the September quarter. Net assets employed rose by $425mm while cash balances rose by $66mm."
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 $44.76 yesterday.
Needham analyst says, "There is currently a 93% correlation between FY12E ROIC and media industry share prices. Wall St closely follows the income statement, ie, the numerator. In this quarterly report, we analyze the denominator - trends in assets employed, capital intensity, and free cash flow. Highlights from VIAB’s capital allocation in the 9/30/11 quarter included: 1. Return of Capital was negative in the most recent quarter. If shares plus debt are shrinking, this implies less capital is being used in the business, which suggests rising ROICs. VIAB’s average Shares Outstanding rose by 2mm ($84mm) and Net Debt rose by $345mm in the Sept 2011 quarter. Therefore, VIAB’s capital required from capital markets rose by about $429mm in the September quarter. 2. CapX trends are a lead-indicator of ROIC growth. VIAB’s CapX fell 9% to $155mm in fiscal 2011, implying improving ROICs. 3. TV & Film. VIAB’s spends 32x more on buying and making film and TV programming than it does on capital spending. VIAB’s TV and Film inventory totaled $5.1B at 9/30/11, about flat over the past two years. 4. Total Assets rose by $491mm (up 2%) to $22.8B in the September quarter. Net assets employed rose by $425mm while cash balances rose by $66mm."
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 $44.76 yesterday.
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