CBS Current Valuation "Egregiously Cheap"

amp9632amp160amp160amp160 ActionEvent Following strong Q3 results we leave our 201516 EPS forecasts broadly unchanged at 343400 vs 342400 previously With the balance of risks to 2016 forecasts now on the upside in our view we regard the current valuation as egregiously cheap We remain OPamp9632amp160amp160amp160 Advertising trends strong In line with peers CBS is reporting elevated levels of demand in the scatter market amp8211 management highlighted scatter is quotthe strongest we39ve seen it for yearsquot This provides a strong tailwind into Q4 but we also highlight that 2016 will include the Super Bowl 7 February and the Presidential Election 8 November These should sustain the advertising tailwind through to the end of next year in our viewamp9632amp160amp160amp160 Online consumption shift should be accretive We believe the decision to make a new series of Star Trek available exclusively on CBS All Access signals an attempt to accelerate the evolution of the service into a distribution platform with real scale We also note management expects quotone or morequot tech company to launch a new video platform during 2016 which we assume will include the CBS network and local affiliates Given CBS will generate more per subscriber from these new platforms than it does in the current ecosystem and given zero exposure to basic cable these developments illustrate that CBS is arguably the best positioned in the industry amp8211 it should make more money from the marginal subscriber shifting video consumption to online platforms and is therefore the only content owner where this shift should be accretive not dilutiveamp9632amp160amp160amp160 Valuation Our target price is unchanged at 75 which equates to 188x 2016 PE and we continue to expect 18 CAGR in EPS 20142017EDocument Link 13 Pages 733KBThe opinions and points of view expressed in this commentary are exclusively the views of the author and do not necessarily represent the views of MediaVillagecom MyersBizNet Inc management or associated bloggers amp160

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CBS Current Valuation "Egregiously Cheap"

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Omar Sheikh

"About That with Carl Mayer:" Alaina Donnellon (Episode 6) - By Carl Mayer

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Omar Sheikh

"About That with Carl Mayer:" Alaina Donnellon (Episode 6) - By Carl Mayer

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