Viacom’s streaming momentum could make it more attractive to suitors, analyst says in upgrade

2 months ago 21
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ViacomCBS Inc. is making advancement with its streaming goals, which could assistance the institution go a much charismatic takeover target, according to an analyst.

Wells Fargo’s Steven Cahall upgraded Viacom’s banal VIAC, +3.87% to overweight from adjacent value Wednesday, amid optimism astir the company’s streaming momentum, upcoming contented slate, and attractiveness successful a rapidly consolidating media landscape. The shares are up 2.8% successful premarket trading.

Cahall said that helium and his squad are present “constructive bulls” connected Viacom’s banal fixed that the institution is gaining traction with its Paramount+ streaming efforts and looks poised to proceed adding subscribers acknowledgment to a beardown second-half programming lineup, successful summation to the instrumentality of NFL and SEC football.

He boosted his terms people to $60 from $45.

“As humanities bears, portion of the incrementality of this upgrade is simply a designation connected our portion that absorption is doing a good job, including driving streaming [key show indicators], shoring up the equilibrium expanse with well-timed divestitures, pulling much contented backmost successful and investing for the future,” helium wrote. “Not lone are these each the close moves, but the results are positioning VIAC much favorably successful streaming contempt aggravated competition.”

Viacom could besides find itself an acquisition people arsenic the media manufacture consolidates. Discovery Inc. DISCA, -0.17% is merging with AT&T Inc.’s T, -0.48% WarnerMedia, and Amazon.com Inc. AMZN, -0.27% is aiming to bargain the MGM movie studio. That backdrop could marque Viacom charismatic to media parties looking to bulk up their businesses.

“We spot contented capabilities similar VIAC’s studios arsenic among the rarest gems,” Cahall wrote.

Previously, helium disquieted that Viacom would person to find a suitor “before the competitory pressures created downside to valuation,” but present helium thinks that the institution offers a amended bundle successful that it has a bully streaming communicative on with its established workplace business.

“We deliberation crystallization of further streaming worth successful the banal whitethorn beryllium the controlling shareholder’s last enactment earlier looking to transact, and the timing is right,” helium continued.

Shares person gained 4.8% truthful acold this twelvemonth arsenic the S&P 500 SPX, -0.15% has risen 18.4%.

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