The Ratings Game
G.research analyst upgrades Viacom stock, sees company as perhaps better positioned to negotiate merger deal with Discovery
ViacomCBS Inc. shares are on track to snap a five-day losing streak and an analyst sees reason for optimism ahead.
It has been a volatile stretch for Viacom shares VIAC,
He upgraded Viacom shares to buy from hold Tuesday morning, just two weeks after downgrading them. Tinker now has a $74 “private market value” on the stock, which is up 4.3% in midday trading to roughly $47.
Tinker acknowledges that ViacomCBS still is late to the game in streaming, and competes against well-managed competitors like Amazon.com Inc. AMZN,
Tinker argued that Viacom’s recent decision to purchase the rights to the Italian soccer Serie A and Coppa Italia complements the existing portfolio of its Paramount+ streaming service and “further differentiates” the service from those offered by Netflix and Apple Inc. AAPL,
The company also renewed its National Football League commitments at a “high, but expected, price,” he said. Amazon’s purchase of the exclusive rights to Thursday Night Football suggest that company “also believe[s] football is a key subscriber driver.”
Tinker sees Viacom as potentially in a better position to negotiate a merger deal with Discovery Inc. DISCA,
Malone “might prefer to take Apple stock in exchange for Discovery, whose non-violent programming may be attractive to the relatively family friendly programmer,” Tinker said, but a potential merger with ViacomCBS”not only creates scale but enables Discovery to better monetize its programming via advertising on Pluto TV.”
Discovery shares are also rallying Tuesday, up 8.5% in midday trading.
Viacom shares are up 28% over the past three months, while Discovery shares are up 51%. The S&P 500 SPX,