Topline
Deutsche Bank analysts have named media and entertainment giant ViacomCBS one of the top stock picks for 2022, saying it is trading at a much lower valuation than its rivals and predicting that the company could become the next big streaming giant thanks to a vast library of content.
“Yellowstone” stars Luke Grimes and Kevin Costner.
LINSON ENTERTAINMENT/Newscom
Highlights
Deutsche Bank recently upgraded ViacomCBS to a “buy” rating, raising its price target for the stock to $43 per share, implying a nearly 23% upside from Monday’s price of around $35. per share.
The company points out that ViacomCBS, which is enjoying “greater success in streaming” as it now spends billions of dollars a year on content, is still significantly undervalued compared to rivals like Netflix and Disney.
Viacom’s enterprise value is a fraction of other established streaming giants, “yet its annual content budget puts it in the range of this peer group,” analysts said.
The media conglomerate also has huge appeal thanks to its extensive portfolio of popular content brands, including CBS-affiliated stations Comedy Central, Showtime, Paramount Network and Pluto TV.
Deutsche Bank is optimistic about the company’s streaming service launched last year, Paramount+, which offers content such as “Yellowstone” – recently the most popular show on cable TV – and the prequel series “1883 ” on his platform.
Shares of ViacomCBS fell 1.3% on Monday despite analysts’ recent upgrade; After falling more than 20% last year, the stock is up more than 8% so far in 2022.
Crucial quote:
“While not everyone will be successful in streaming, we believe Viacom has an opportunity to successfully transition its business model given its content portfolio (including sports rights),” Deutsche analysts wrote. Bank. “We understand the skepticism…However, Viacom owns IP (intellectual property) that has and continues to create hits.”
Large number: 47 million
This is Viacom CBS’ global subscriber count on its Paramount+ and Showtime streaming platforms. Bigger rivals like Netflix, Disney and WarnerMedia’s HBO Max have around 214 million, 118 million and 69 million subscribers respectively.
Tangent:
Ariel Investments founder and chairman John W. Rogers is also bullish on ViacomCBS, naming the stock as one of his top picks for 2022 in an interview with Forbes last month. In addition to ViacomCBS having a “much broader set of content” than many of its competitors, Rogers sees great value in the business as it continues to see subscriber growth and makes significant investments in streaming.
Further reading:
Discovery shares jump 17% as excitement mounts over WarnerMedia deal (Forbes)
Zynga shares jumped 40% after Take-Two announced a $12.7 billion takeover (Forbes)
