CBS Stock Price Target Gets a Boost on Positive Growth Outlook

The Late Show With Stephen Colbert
NEW YORK CITY – TUESDAY SEPTEMBER 22 2015: Crowds line up outside the Ed Sullivan Theater for CBS Television Late Night Show with Stephen Colbert.

Analysts were bullish after CBS Corp.’s (CBS) investor day on Tuesday, with three raising their price targets for the stock on Wednesday. Benjamin Mogil, analyst at Nicolaus, Stifel, bumped his target stock price $6 up to $60, and kept his “buy” rating intact.

Mogil wrote that following the investor day, the firm was more positive on the CBS name, and praised the company’s focus on content ownership as well as its commitment to increase distribution opportunities.

Michael Morris at Guggenheim Securities boosted his price target to $60 as well, up $4, and maintained a “buy” rating for the stock. Morris noted that the increased price target was a reflection of the “company’s strong content ownership and unique digital opportunities.” He also noted management’s confidence in the growth opportunities outline on investor day.

John Janedis, analyst at Jefferies, also raised his target to $60 and maintained a “buy” rating on the stock. In his report. Janedis cites comments from CBS management, led by CEO Leslie Moonves, which included the “four key pillars of growth” the company hopes to achieve in the coming five years.

CBS has boosted its 2020 retransmission consent revenue target to $2.5 billion, up from $2.0 billion. The company also projects that Showtime Over-the-Top and CBS All Access will reach 4 million subscribers each.

Janedis notes that if CBS is able to achieve these goals, $1.30-$1.50 could be added to Jefferies’ 2020 earnings per share estimates. He also noted that the retrans comments hint at a retrans rate of $3 per subscriber each month. Janedis estimates that the resulting $500 million worth of revenue upside equals about $0.75 per share to the 2020 estimated earnings.

Over the last five years, CBS has tripled its revenue due to strong global demand.

Shares for CBS closed at $52.59 on Tuesday. Over the last year, shares have reached a high of $63.95 and a low of $38.51.