We are raising our price target on ViacomCBS (VIAC) from 54 to 65 and moving to HOLD.
VIAC shares continue to surge and now trade about 40% higher than their pre-pandemic year-end 2019 closing price of 41.97. We are incrementally raising our price target to 65 (an additional 10% upside from last night’s close).
The shares have reached mostly full valuation at our low target multiple, yet the company has more aggressively cut costs while accelerating its growth initiatives including Paramount+ and what appears to be an emerging sports gaming opportunity through its powerful CBS Sports franchise. We believe advertising revenues will continue to improve, helping offset difficult theatrical revenue conditions. In effect, we are raising our target earnings (EBITDA) multiple on the shares.
The company reports earnings next Wednesday, February 24, so unless the shares rise above our new target we will be holding them through earnings. Investors with large positions and large profits may want to reduce their positions by half.